Exhibit 10.1
$350,000,000
CREDIT AGREEMENT
DATED AS OF JUNE 29, 2001
AMONG
HARNISCHFEGER INDUSTRIES, INC.
as Borrower,
THE LENDERS LISTED HEREIN,
as Lenders,
BANKERS TRUST COMPANY,
as Agent,
XXXXXX FINANCIAL, INC.
and
FLEET CAPITAL CORPORATION,
as Co-Syndication Agents,
CIT GROUP/BUSINESS CREDIT,
as Documentation Agent
and
DEUTSCHE BANC ALEX. XXXXX INC.,
as Lead Arranger and Sole Book Running Manager
TABLE OF CONTENTS
Page
Section 1. DEFINITIONS.......................................................................... 2
1.1 Certain Defined Terms................................................................ 2
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under
Agreement............................................................................ 47
1.3 Other Definitional Provisions........................................................ 48
Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS........................................... 48
2.1 Commitments; Making of Loans; the Register; Notes.................................... 48
2.2 Interest on the Loans................................................................ 55
2.3 Fees................................................................................. 60
2.4 Repayments, Scheduled Reductions of Revolving Loan Commitments; Prepayments
and Reductions in Revolving Loan Commitments; General Provisions Regarding
Payments; Application of Proceeds of Collateral and Payments Under Guaranties........ 60
2.5 Use of Proceeds...................................................................... 70
2.6 Special Provisions Governing Eurodollar Rate Loans................................... 71
2.7 Increased Costs; Taxes; Capital Adequacy............................................. 73
2.8 Statement of Lenders; Obligation of Lenders and Issuing Lenders to Mitigate.......... 77
2.9 Replacement of a Lender.............................................................. 77
2.10 Collection, Deposit and Transfer of Payments in Respect of Accounts of
Borrower and Domestic Subsidiaries; Other Matters Concerning Accounts................ 78
2.11 Collection, Deposit and Transfer of Payments in Respect of Accounts of Foreign
Subsidiaries......................................................................... 80
Section 3. LETTERS OF CREDIT.................................................................... 81
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations Therein........ 81
3.2 Letter of Credit Fees................................................................ 83
3.3 Drawings and Reimbursement of Amounts Drawn Under Letters of Credit.................. 84
3.4 Obligations Absolute................................................................. 87
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TABLE OF CONTENTS
(continued)
Page
3.5 Indemnification; Nature of Issuing Lenders' Duties.................................. 88
Section 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT........................................... 89
4.1 Conditions to Term Loans and Initial Revolving Loans................................ 89
4.2 Conditions to All Loans............................................................. 98
4.3 Conditions to Letters of Credit..................................................... 98
Section 5. BORROWER'S REPRESENTATIONS AND WARRANTIES........................................... 99
5.1 Organization, Powers, Qualification, Good Standing, Business and Subsidiaries....... 99
5.2 Authorization of Borrowing, etc..................................................... 100
5.3 Financial Condition................................................................. 101
5.4 No Material Adverse Change; No Restricted Junior Payments........................... 101
5.5 Title to Properties; Liens; Real Property........................................... 101
5.6 Litigation; Violation of Law........................................................ 102
5.7 Payment of Taxes.................................................................... 102
5.8 Performance of Agreements; Materially Adverse Agreements; Material Contracts........ 103
5.9 Governmental Regulation............................................................. 103
5.10 Securities Activities............................................................... 103
5.11 Employee Benefit Plans.............................................................. 104
5.12 Certain Fees........................................................................ 104
5.13 Environmental Protection............................................................ 104
5.14 Employee Matters.................................................................... 105
5.15 Solvency............................................................................ 105
5.16 Matters Relating to Collateral...................................................... 105
5.17 Disclosure.......................................................................... 106
5.18 Representations and Warranties in Related Agreements................................ 107
5.19 Permits............................................................................. 107
5.20 Matters Relating to Company Bankruptcy Proceedings.................................. 107
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TABLE OF CONTENTS
(continued)
Page
Section 6. BORROWER'S AFFIRMATIVE COVENANTS.................................................... 108
6.1 Financial Statements and Other Reports.............................................. 108
6.2 Existence, etc...................................................................... 114
6.3 Payment of Taxes and Claims; Tax.................................................... 114
6.4 Maintenance of Properties; Insurance; Application of Net Insurance/
Condemnation Proceeds............................................................... 114
6.5 Inspection; Lender Meeting; UK Restructuring Presentation........................... 116
6.6 Compliance with Laws, etc........................................................... 117
6.7 Environmental Disclosure and Inspection............................................. 117
6.8 Borrower's Remedial Action Regarding Hazardous Materials............................ 118
6.9 Execution of Loan Documents and Personal Property Collateral Documents and
Registration of Certain Collateral After the Closing Date........................... 119
6.10 Matters Relating to Additional Real Property Collateral; Headquarters Sale.......... 120
6.11 Revised UCC Article 9............................................................... 121
Section 7. BORROWER'S NEGATIVE COVENANTS....................................................... 122
7.1 Indebtedness........................................................................ 122
7.2 Liens and Related Matters........................................................... 124
7.3 Investments; Acquisitions........................................................... 125
7.4 Contingent Obligations.............................................................. 126
7.5 Restricted Junior Payments.......................................................... 127
7.6 Financial Covenants................................................................. 127
7.7 Restriction on Fundamental Changes; Asset Sales..................................... 129
7.8 Consolidated Capital Expenditures................................................... 130
7.9 Restriction on Leases............................................................... 131
7.10 Sales and Lease-Backs............................................................... 131
7.11 Sale or Discount of Receivables..................................................... 131
7.12 Transactions with Shareholders and Affiliates....................................... 131
7.13 Disposal of Subsidiary Stock........................................................ 132
7.14 Conduct of Business................................................................. 132
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TABLE OF CONTENTS
(continued)
Page
7.15 Amendments or Waivers of Certain Agreements; Amendments of Documents Relating
to Subordinated Indebtedness........................................................ 132
7.16 Fiscal Year......................................................................... 133
7.17 Deposit Accounts.................................................................... 133
7.18 Restrictions on HULC................................................................ 133
Section 8. EVENTS OF DEFAULT................................................................... 133
8.1 Failure to Make Payments When Due................................................... 134
8.2 Default in Other Agreements......................................................... 134
8.3 Breach of Certain Covenants......................................................... 134
8.4 Breach of Warranty.................................................................. 134
8.5 Other Defaults Under Loan Documents................................................. 135
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc................................ 135
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.................................. 135
8.8 Judgments and Attachments........................................................... 136
8.9 Dissolution......................................................................... 136
8.10 Employee Benefit Plans.............................................................. 136
8.11 Change in Control................................................................... 136
8.12 Invalidity of Any Guaranty.......................................................... 136
8.13 Failure of Security................................................................. 137
8.14 Failure to Consummate Reorganization and Other Transactions......................... 137
Section 9. AGENT............................................................................... 138
9.1 Appointment......................................................................... 138
9.2 Powers and Duties; General Immunity................................................. 139
9.3 Independent Investigation by Lenders; No Responsibility For Appraisal of
Creditworthiness.................................................................... 140
9.4 Right to Indemnity.................................................................. 141
9.5 Successor Agent..................................................................... 141
9.6 Collateral Documents and Guaranties................................................. 141
9.7 Agent May File Proofs of Claim...................................................... 142
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TABLE OF CONTENTS
(continued)
Page
Section 10. MISCELLANEOUS........................................................................ 143
10.1 Successors and Assigns; Assignments and Participations in Loans and Letters of
Credit............................................................................... 143
10.2 Expenses............................................................................. 146
10.3 Indemnity........................................................................... 147
10.4 Set-Off; Security Interest in Deposit Accounts...................................... 148
10.5 Ratable Sharing..................................................................... 148
10.6 Amendments and Waivers.............................................................. 149
10.7 Independence of Covenants........................................................... 150
10.8 Notices; Effectiveness of Signatures................................................ 150
10.9 Survival of Representations, Warranties and Agreements.............................. 151
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative............................... 151
10.11 Marshalling; Payments Set Aside..................................................... 151
10.12 Severability........................................................................ 152
10.13 Obligations Several; Independent Nature of Lenders' Rights.......................... 152
10.14 Headings............................................................................ 152
10.15 Applicable Law...................................................................... 152
10.16 Construction of Agreement; Nature of Relationship................................... 153
10.17 Consent to Jurisdiction and Service of Process...................................... 153
10.18 Waiver of Jury Trial................................................................ 154
10.19 Confidentiality..................................................................... 154
10.20 Counterparts; Effectiveness......................................................... 155
10.21 Judgment Currency................................................................... 155
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EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF REQUEST FOR ISSUANCE OF LETTER OF CREDIT
IV-A FORM OF REVOLVING NOTE
IV-B FORM OF TERM NOTE
V FORM OF INTERCOMPANY NOTE
VI FORM OF COMPLIANCE CERTIFICATE
VII FORM OF BORROWING BASE CERTIFICATE
VIII FORM OF OPINION OF COMPANY COUNSEL
IX FORM OF OPINION OF O'MELVENY & XXXXX
X FORM OF ASSIGNMENT AGREEMENT
XI FORM OF BLOCKED ACCOUNT AGREEMENT
XII FORMS OF COLLATERAL ACCESS AGREEMENT
XIII FORM OF LOCK BOX AGREEMENT
XIV FORM OF SECURITY AGREEMENT
XV FORM OF GUARANTY
XVI FORM OF ENVIRONMENTAL INDEMNITY
SCHEDULES
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
4.1M CLOSING DATE MORTGAGED PROPERTIES
5.1 SUBSIDIARIES OF BORROWER
5.5B REAL PROPERTY ASSETS
5.5C INTELLECTUAL PROPERTY
5.6 LITIGATION
5.8 MATERIAL CONTRACTS
5.13 ENVIRONMENTAL MATTERS
7.1 CERTAIN EXISTING INDEBTEDNESS
7.2 CERTAIN EXISTING LIENS
7.3 CERTAIN EXISTING INVESTMENTS
7.4 CERTAIN CONTINGENT OBLIGATIONS
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CREDIT AGREEMENT
----------------
This CREDIT AGREEMENT is dated as of June 29, 2001 and entered into by
and among HARNISCHFEGER INDUSTRIES, INC., a Delaware corporation ("Borrower"),
THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each
individually referred to herein as a "Lender" and collectively as "Lenders") and
BANKERS TRUST COMPANY ("BTCo"), as administrative agent for Lenders (in such
capacity, "Agent").
R E C I T A L S
WHEREAS, pursuant to the Confirmation Order (this, and other initially
capitalized terms used but not defined in these Recitals, being used as defined
in Section 1.1 below), Borrower and Debtor Subsidiaries have been reorganized in
and have emerged from the Company Bankruptcy Proceeding; and
WHEREAS, upon this Agreement becoming effective in accordance with its
terms, the Plan of Reorganization will become effective in accordance with its
terms; and
WHEREAS, Borrower desires that Lenders extend certain credit
facilities to Borrower, the proceeds of which will be used, among other things,
to make certain cash payments with respect to certain prepetition claims in the
Company Bankruptcy Proceeding, to refinance the DIP Facility and to replace
outstanding letters of credit thereunder and under other credit facilities, to
refinance certain other Indebtedness, to make certain intercompany loans and
loans to Beloit as described below, and for working capital and other general
corporate purposes of Borrower and its Subsidiaries, all in accordance with the
terms and provisions herein; and
WHEREAS, Borrower has agreed to secure its Obligations hereunder and
under the other Loan Documents by granting to Agent, on behalf of Lenders, among
other things, a First Priority Lien on substantially all of its real, personal
and mixed property located in any Approved Jurisdiction, including a pledge of
all of the capital stock and other ownership interests of its Domestic
Subsidiaries and 66% of the capital stock and other ownership interests of its
first tier Foreign Subsidiaries; and
WHEREAS, each Domestic Subsidiary (other than Immaterial Subsidiaries)
has agreed to guarantee the Obligations hereunder and under the other Loan
Documents and to secure its guaranty by granting to Agent, on behalf of Lenders,
among other things, a First Priority Lien on substantially all of its real,
personal and mixed property located in any Approved Jurisdiction, including a
pledge of all of the capital stock and other ownership interests
of its Domestic Subsidiaries and 66% of the capital stock and other ownership
interests of its first tier Foreign Subsidiaries; and
WHEREAS, the Australian Loan Parties, the Canadian Loan Parties and
the UK Loan Parties have each requested Borrower to make available certain
credit extensions to such Foreign Loan Parties, including the proceeds of the
Loans made by the Lenders under this Agreement and Letters of Credit issued by
Issuing Lenders under this Agreement for the account of such Foreign Loan
Parties, and Borrower is prepared to make available such credit extensions to
such Foreign Loan Parties provided that (i) such credit extensions do not exceed
the Borrowing Base plus any Surplus Capacity applicable to such Foreign Loan
Parties, (ii) all such credit extensions are evidenced by an Intercompany Note
executed by such Foreign Loan Parties or guaranteed by such Foreign Loan
Parties, in each case which Intercompany Note and Intercompany Guaranties are
pledged and/or assigned by Borrower to Agent for the benefit of Lenders under
this Agreement, and (iii) which Intercompany Note and Intercompany Guaranties
are secured by a First Priority Lien on substantially all of such Foreign Loan
Parties' real, personal and mixed property located in any Approved Jurisdiction,
all of which security interests will be assigned by Borrower to Agent for the
benefit of Lenders under this Agreement; and
WHEREAS, Beloit has requested Borrower to advance the proceeds of
certain Loans made by Lenders to Borrower under this Agreement to Beloit up to a
maximum aggregate principal amount of $15,000,000, and Borrower is prepared to
advance such proceeds to Beloit provided that (i) such loans, together with all
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intercompany credit extensions made to Borrower for the benefit of Domestic Loan
Parties, do not exceed the Domestic Borrowing Base, (ii) all such loans are
evidenced by the Beloit Note executed by Beloit and guaranteed by certain
Domestic Subsidiaries of Beloit Corporation (other than Immaterial
Subsidiaries), which Beloit Note and guarantees are pledged and/or assigned by
Borrower to Agent for the benefit of Lenders under this Agreement, and (iii)
which Beloit Note and guarantees are secured by a First Priority Lien on
substantially all of Beloit's and such Domestic Subsidiaries' personal and mixed
property, all of which security interests will be assigned by Borrower to Agent
for the benefit of Lenders under this Agreement;
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, each of Borrower, Lenders
and Agent agree as follows:
SECTION 1. DEFINITIONS
1.1 Certain Defined Terms.
---------------------
The following terms used in this Agreement shall have the following
meanings:
"Account" means, with respect to any Person, all present and future
rights of such Person to payment for goods sold or leased or for services
rendered (except those evidenced by instruments or chattel paper), whether now
existing or hereafter arising and wherever arising, and whether or not they have
been earned by performance.
2
"Additional Mortgage" has the meaning set forth in subsection 6.10B.
"Additional Mortgaged Property" has the meaning set forth in
subsection 6.10B.
"Adjusted Eurodollar Rate" means, for any Interest Rate Determination
Date with respect to an Interest Period for a Eurodollar Rate Loan, the rate per
annum obtained by dividing (i) the offered quotation (rounded upward to the
--------
nearest 1/16 of one percent) to first class banks in the interbank Eurodollar
market by BTCo for U.S. dollar deposits of amounts in same day funds comparable
to the principal amount of the Eurodollar Rate Loan of BTCo for which the
Adjusted Eurodollar Rate is then being determined with maturities comparable to
such Interest Period as of approximately 12:00 Noon (New York City time) on such
Interest Rate Determination Date by (ii) a percentage equal to 100% minus the
-- -----
stated maximum rate of all reserve requirements (including, without limitation,
any marginal, emergency, supplemental, special or other reserves) applicable on
such Interest Rate Determination Date to any member bank of the Federal Reserve
System in respect of "Eurocurrency liabilities" as defined in Regulation D (or
any successor category of liabilities under Regulation D).
"Adjusted Pro Rata Share" means, with respect to any Lender, the
percentage obtained by dividing (i) the Revolving Loan Exposure of that Lender
--------
by (ii) the aggregate Revolving Loan Exposure of all Lenders other than Daily
--
Funding Lender.
"Advance Payment Liability" means the liability of a Person upon the
execution or effectiveness of an agreement as a result of an advance payment by
the other party to such agreement for the goods or services to be produced or
performed by such Person in accordance with such agreement.
"Affected Lender" has the meaning assigned to that term in subsection
2.6C.
"Affected Loans" has the meaning assigned to that term in subsection
2.6C.
"Affiliate," as applied to any Person, means any other Person directly
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
"Affiliated Fund" means, with respect to any Lender, a fund that
invests in commercial loans and is managed by the same investment advisor as
such Lender, an Affiliate of such Lender or by an Affiliate of the same
investment advisor as such Lender.
"Agent" has the meaning assigned to that term in the introduction to
this Agreement, and, with respect to the issuance of any Letter of Credit and so
long as BTCo serves as Agent hereunder, includes any Affiliates of BTCo
(including, without limitation, Deutsche Bank AG) acting as an Issuing Lender,
and also means and includes any successor Agent appointed pursuant to subsection
9.5.
3
"Agreement" means this Credit Agreement dated as of June 29, 2001, as
it may be amended, supplemented or otherwise modified from time to time.
"Appraised Fair Market Value of Eligible Intellectual Property" means,
with respect to Intellectual Property of any Person, the fair market value of
such Intellectual Property established in the appraisals delivered to Agent
pursuant to subsection 4.1O and approved by Agent or any appraisal performed
pursuant to subsection 6.5 and approved by Agent and Requisite Lenders, all in
form, scope and substance reasonably satisfactory to Agent and satisfying the
requirements of any applicable laws and regulations.
"Appraised Fair Market Value of Eligible Real Estate" means, with
respect to Real Property Assets of any Person, the fair market value of such
Real Property Assets established in the appraisals delivered to Agent pursuant
to subsection 4.1O and approved by Agent or any subsequent appraisal performed
pursuant to subsections 6.5 and 6.10C and approved by Agent and Requisite
Lenders, all in form, scope and substance reasonably satisfactory to Agent and
satisfying the requirements of any applicable laws and regulations.
"Approved Currency" means Australian Dollars, Canadian Dollars, Pound
Sterling or US Dollars.
"Approved Jurisdictions" means, individually and collectively, the
countries of (a) the United States of America, (b) the United Kingdom, (c)
Canada, and (d) Australia.
"Approved Plan of Reorganization" means the Plan of Reorganization in
the form, without material modification, amendment or revision, approved by
Agent pursuant to Section 4.1P.
"Arranger" means Deutsche Banc Alex. Xxxxx Inc., as lead arranger and
sole book running manager.
"Asset Sale" means the sale by Borrower or any of its Subsidiaries to
any Person other than Borrower or a Guarantor of (i) any of the stock of any of
Borrower's Subsidiaries, (ii) substantially all of the assets of any division or
line of business of Borrower or any of its Subsidiaries, or (iii) any other
assets (whether tangible or intangible) of Borrower or any of its Subsidiaries
(other than (a) inventory sold in the ordinary course of business, (b) the
Headquarters Sale and (c) any such other assets to the extent that the aggregate
value of such assets sold in any single transaction or related series of
transactions is equal to $1,000,000 or less, up to a maximum aggregate amount of
$5,000,000 for all such excluded assets).
"Assignment Agreement" means an Assignment Agreement in substantially
the form of Exhibit X annexed hereto.
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"Australian Joy Subsidiary Borrowing Limit" means the lesser of (i)
$75,000,000 or (ii) the amount of the Commitments.
"Australian Joy Loan Parties" means, individually and collectively,
each Subsidiary of Borrower which is organized under the laws of the
Commonwealth of Australia or any state thereof and which has either executed the
Australian Joy Subsidiary Note or an Intercompany Note Guaranty thereof, which
Australian Joy Subsidiary Note or Intercompany Note Guaranty is secured by a
security interest in substantially all of such Subsidiary's real,
4
personal and mixed property. The Australian Joy Loan Parties, as of the Closing
Date, are so designated in Schedule 5.1.
------------
"Australian Joy Subsidiary Borrowing Base" means, as at any date of
determination, an aggregate amount in Dollar Equivalents if denominated in an
Approved Currency other than US Dollars, equal to:
(i) eighty-five percent (85%) of Eligible Accounts Receivable
of Australian Joy Loan Parties, plus
(ii) thirty-five percent (35%) of Eligible Unbilled Accounts
Receivable of Australian Joy Loan Parties, plus
(iii) fifty percent (50%) of Eligible Raw Materials of
Australian Joy Loan Parties, plus
(iv) fifty percent (50%) of Eligible Finished Goods of
Australian Joy Loan Parties, plus
(v) fifty percent (50%) of Eligible CEP of Australian Joy Loan
Parties, plus
(vi) thirty-five percent (35%) of Eligible Work-in-Process of
Australian Joy Loan Parties, plus
(vii) the lesser of (x) ninety percent (90%) of the Orderly
Liquidation Value of Eligible Machinery and Equipment of Australian
Joy Loan Parties and (y) an amount equal to $1,700,000 on or prior to
July 30, 2002, $1,000,000 during the period from July 31, 2002 through
October 30, 2002 and zero thereafter, plus
(viii) the lesser of (x) sixty percent (60%) of the Appraised
Fair Market Value of Eligible Real Estate of Australian Joy Loan
Parties and (y) an amount equal to $2,000,000 on or prior to January
30, 2002, $1,500,000 during the period from January 31, 2002 through
April 29, 2002, $700,000 during the period form April 30, 2002 through
July 30, 2002 and zero thereafter, plus
(ix) fifty percent (50%) of Eligible Tools of Australian Joy
Loan Parties, minus
(x) the Swap Reserve applicable to the Australian Joy Loan
Parties then in effect, minus
(xi) the aggregate amount of Dilution Reserves and Required
Reserves against Eligible Accounts Receivable, Eligible Unbilled
Accounts Receivable, Eligible Inventory, Eligible Machinery and
Equipment and Eligible Real Estate of Australian Joy Loan Parties;
5
provided that Agent, in the exercise of its Permitted Discretion, may
--------
(a) increase or decrease such Required Reserves and (b) reduce the advance rates
provided in this definition, or restore such advance rates to any level equal to
or below the advance rates in effect as of the Closing Date.
"Australian P&H Subsidiary Borrowing Limit" means the lesser of (i)
$25,000,000 or (ii) the amount of the Commitments.
"Australian Joy Subsidiary Note" means that certain Intercompany Note
dated on or about the date hereof, executed by Australian Joy Loan Parties in
favor of Borrower, as such promissory note may be amended from time to time
thereafter to the extent permitted under subsection 7.15.
"Australian Joy Utilization of Surplus Capacity" means, as of the date
of determination, the portion, if any, of the Surplus Capacity then in effect
allocated by Borrower to the Australian Joy Loan Parties.
"Australian Loan Parties" means, individually and collectively, the
Australian Joy Loan Parties and the Australian P&H Loan Parties.
"Australian P&H Loan Parties" means, individually and collectively,
each Subsidiary of Borrower which is organized under the laws of the
Commonwealth of Australia or any state thereof and which has either executed the
Australian P&H Subsidiary Note or an Intercompany Note Guaranty thereof, which
Australian P&H Subsidiary Note or Intercompany Note Guaranty is secured by a
security interest in substantially all of such Subsidiary's real, personal and
mixed property. The Australian P&H Loan Parties, as of the Closing Date, are so
designated in Schedule 5.1.
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"Australian P&H Subsidiary Borrowing Base" means, as at any date of
determination, an aggregate amount in Dollar Equivalents if denominated in an
Approved Currency other than US Dollars, equal to:
(i) eighty-five percent (85%) of Eligible Accounts Receivable
of Australian P&H Loan Parties, plus
(ii) thirty-five percent (35%) of Eligible Unbilled Accounts
Receivable of Australian P&H Loan Parties, plus
(iii) fifty percent (50%) of Eligible Raw Materials of
Australian P&H Loan Parties, plus
(iv) fifty percent (50%) of Eligible Finished Goods of
Australian P&H Loan Parties, plus
(v) fifty percent (50%) of Eligible CEP of Australian P&H Loan
Parties, plus
(vi) thirty-five percent (35%) of Eligible Work-in-Process of
Australian P&H Loan Parties, plus
6
(vii) the lesser of (x) ninety percent (90%) of the Orderly
Liquidation Value of Eligible Machinery and Equipment of Australian
P&H Loan Parties and (y) an amount equal to $1,800,000 on or prior to
July 30, 2002, $1,000,000 during the period from July 31, 2002 through
October 30, 2002 and zero thereafter, plus
(viii) the lesser of (x) sixty percent (60%) of the Appraised
Fair Market Value of Eligible Real Estate of Australian P&H Loan
Parties and (y) an amount equal to $2,500,000 on or prior to January
30, 2002, $2,000,000 during the period from January 31, 2002 through
April 29, 2002, $800,000 during the period form April 30, 2002 through
July 30, 2002 and zero thereafter, plus
(ix) fifty percent (50%) of Eligible Tools of Australian P&H
Loan Parties, minus
(x) the Swap Reserve applicable to the Australian P&H Loan
Parties then in effect, minus
(xi) the aggregate amount of Dilution Reserves and Required
Reserves against Eligible Accounts Receivable, Eligible Unbilled
Accounts Receivable, Eligible Inventory, Eligible Machinery and
Equipment and Eligible Real Estate of Australian P&H Loan Parties;
provided that Agent, in the exercise of its Permitted Discretion, may
--------
(a) increase or decrease such Required Reserves and (b) reduce the advance rates
provided in this definition, or restore such advance rates to any level equal to
or below the advance rates in effect as of the Closing Date.
"Australian P&H Subsidiary Note" means that certain Intercompany Note
dated on or about the date hereof, executed by Australian P&H Loan Parties in
favor of Borrower, as such promissory note may be amended from time to time
thereafter to the extent permitted under subsection 7.15.
"Australian P&H Utilization of Surplus Capacity" means, as of the date
of determination, the portion, if any, of the Surplus Capacity then in effect
allocated by Borrower to the Australian P&H Loan Parties.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute, and any
similar or comparable law of any other applicable Governmental Authority.
"Bankruptcy Court" means the United States Bankruptcy Court for the
District of Delaware having jurisdiction over the Company Bankruptcy Proceeding.
"Base Rate" means, at any time, the higher of (x) the Prime Rate or
(y) the rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate.
"Base Rate Loans" means Loans bearing interest at rates determined by
reference to the Base Rate as provided in subsection 2.2A.
7
"Base Rate Margin" means the margin over the Base Rate used in
determining the rate of interest of Base Rate Loans pursuant to subsection 2.2A.
"Beloit" means Beloit Liquidating Trust, a grantor liquidating trust
established by Borrower with Xxxxx Xxxxxx as the Plan Administrator.
"Beloit Collateral Documents" means all such agreements, documents and
instruments that, in Agent's reasonable judgment, are required (a) to evidence a
First Priority Lien in favor of Borrower in substantially all personal and mixed
property of Beloit as security for Beloit's obligations under the Beloit Note,
including without limitation a promissory note in the aggregate principal amount
of $110,000,000, dated March 31, 2000, made by PT Indah Kiat Finance (IV)
Mauritius Limited in favor of Beloit Corporation (the "APP Note"), and (b) to
evidence a First Priority Lien in favor of Borrower in substantially all
personal and mixed property of the guarantors under the Beloit Note Guaranty as
security for such guarantors' obligations under the Beloit Note Guaranty, all in
form and substance reasonably satisfactory to Agent, as may be amended from time
to time thereafter to the extent permitted under subsection 7.15.
"Beloit Note" means that certain Promissory Note in the original
principal amount of $15,000,000, dated on or about the date hereof, executed by
Beloit in favor of Borrower and evidencing Beloit's obligations to repay the
credit extensions made by Borrower to Beloit pursuant to subsection 2.5A hereof,
in the form approved by Agent prior to the Closing Date, as such promissory note
may be amended from time to time thereafter to the extent permitted under
subsection 7.15.
"Beloit Note Guaranty" means that certain Beloit Note Guaranty or
Beloit Note Guaranties executed and delivered by the Domestic Subsidiaries of
Beloit (excluding any Immaterial Subsidiaries) in favor of Borrower and
guarantying Beloit's obligations under the Beloit Note, in the form approved by
Agent prior to the Closing Date, as such guaranty may be amended from time to
time thereafter to the extent permitted under subsection 7.15.
"Xxxx-and-Hold Agreement" means a letter or other writing from an
account debtor setting forth the material terms of such account debtor's
purchase of Inventory (including the price and terms of payment, other terms of
sale, description of the applicable asset purchased and projected delivery date)
and acknowledging that title to the applicable asset subject to such purchase
transaction has been legally transferred to such account debtor and that such
account debtor has assumed the legal risk of ownership of such asset,
irrespective of whether such asset is held by such account debtor or any other
Person, in form and substance acceptable to Agent in its reasonable discretion.
"Blocked Account Agreement" means the Blocked Account Agreement
executed and delivered by a Concentration Bank, Agent and the applicable Loan
Party, substantially in the form of Exhibit XI annexed hereto, as such Blocked
----------
Account Agreement may be amended, supplemented or otherwise modified from time
to time, and "Blocked Account Agreements" means all such Blocked Account
Agreements, collectively.
"Borrower" means Harnischfeger Industries, Inc., a Delaware
corporation.
8
"Borrowing Base" means (i) with respect to all Loans and Letters of
Credit, the Consolidated Borrowing Base, (ii) with respect to Loans and the
Letters of Credit for the benefit of Domestic Loan Parties and Beloit, the
Domestic Borrowing Base, (iii) with respect to Loans and Letters of Credit for
the benefit of Australian Joy Loan Parties, the Australian Joy Subsidiary
Borrowing Base, (iv) with respect to Loans and Letters of Credit for the benefit
of Australian P&H Loan Parties, the Australian P&H Subsidiary Borrowing Base,
(v) with respect to Loans and Letters of Credit for the benefit of Canadian Loan
Parties, the Canadian Subsidiary Borrowing Base, and (vi) with respect to Loans
and Letters of Credit for the benefit of UK Loan Parties, the UK Subsidiary
Borrowing Base.
"Borrowing Base Certificate" means a certificate in the form, in all
material respects, of Exhibit VII annexed hereto delivered to Lenders by
-----------
Borrower pursuant to subsection 4.1 or subsection 6.1(xviii).
"Borrowing Limitations" means each of the following limitations on the
borrowing of any Loan and the issuance of any Letter of Credit: (1) the Total
Utilization of Loan Commitments shall not exceed the lesser of (A) the Total
Loan Commitments or (B) the Consolidated Borrowing Base; (2) the Total
Utilization of Revolving Loan Commitments shall not exceed the Revolving Loan
Commitments; (3) the Total Utilization of Loan Commitments for the benefit of
Domestic Loan Parties and Beloit shall not exceed the Domestic Borrowing Base
minus the aggregate Surplus Capacity allocated to Foreign Loan Parties; (4) the
Total Utilization of Loan Commitments for the benefit of Australian Joy Loan
Parties shall not exceed the lesser of (A) the Australian Joy Subsidiary
Borrowing Base plus the Australian Joy Utilization of Surplus Capacity or (B)
the Australian Joy Subsidiary Borrowing Limit; (5) the Total Utilization of Loan
Commitments for the benefit of Australian P&H Loan Parties shall not exceed the
lesser of (A) the Australian P&H Subsidiary Borrowing Base plus the Australian
P&H Utilization of Surplus Capacity or (B) the Australian P&H Subsidiary
Borrowing Limit; (6) the Total Utilization of Loan Commitments for the benefit
of Canadian Loan Parties shall not exceed the lesser of (A) the Canadian
Subsidiary Borrowing Base plus the Canadian Utilization of Surplus Capacity or
(B) the Canadian Subsidiary Borrowing Limit; and (7) the Total Utilization of
Loan Commitments for the benefit of UK Loan Parties shall not exceed the lesser
of (A) the UK Subsidiary Borrowing Base plus UK Utilization of Surplus Capacity
or (B) the UK Subsidiary Borrowing Limit.
"BTCo" has the meaning assigned to that term in the introduction to
this Agreement.
"BTCo Account" means an account maintained by Agent at BTCo into which
the applicable Concentration Banks are instructed to automatically transfer
funds on deposit in the applicable Concentration Accounts pursuant to the terms
of the applicable Blocked Account Agreement, if any.
"BT Concentration Account" means an account under the exclusive
dominion and control of Agent that is maintained by any Loan Party with BTCo
into which the applicable Lock Box Banks are instructed to transfer funds on
deposit in the Lock Box Accounts pursuant to the terms of the Lock Box
Agreements.
"Business Day" means any day excluding Saturday, Sunday and any day
which (a) with respect to credit extensions other than Letters of Credit, is a
legal holiday under the laws of the States of New York or Wisconsin or is a day
on which banking institutions located in
9
either such state are authorized or required by law or other governmental action
to close, (b) with respect to any Letter of Credit, is a legal holiday or a day
on which banking institutions are authorized or required by law or other
governmental action under the laws of the state in which the applicable Issuing
Lender is domiciled, and (c) with respect to Eurodollar Rate Loans, is a day on
which dealings in United States Dollar deposits are not conducted by and between
banks in the designated market for Eurodollar Rate Loans.
"Canadian Subsidiary Borrowing Limit" means the lesser of (i)
$25,000,000 or (ii) the amount of the Commitments.
"Canadian Loan Parties" means, individually and collectively, each
Subsidiary of Borrower which is organized under the laws of Canada or any
province thereof and which has either executed the Canadian Subsidiary Note or
an Intercompany Note Guaranty thereof, which Canadian Subsidiary Note or
Intercompany Note Guaranty is secured by a security interest in substantially
all of such Subsidiary's real, personal and mixed property. The Canadian Loan
Parties, as of the Closing Date, are so designated on Schedule 5.1.
------------
"Canadian Subsidiary Borrowing Base" means, as at any date of
determination, an aggregate amount, in Dollar Equivalents if denominated in an
Approved Currency other than US Dollars, equal to:
(i) eighty-five percent (85%) of Eligible Accounts Receivable
of Canadian Loan Parties, plus
(ii) thirty-five percent (35%) of Eligible Unbilled Accounts
Receivable of Canadian Loan Parties, plus
(iii) fifty percent (50%) of Eligible Raw Materials of Canadian
Loan Parties, plus
(iv) fifty percent (50%) of Eligible Finished Goods of Canadian
Loan Parties, plus
(v) fifty percent (50%) of Eligible CEP of Canadian Loan
Parties, plus
(vi) thirty-five percent (35%) of Eligible Work-in-Process of
Canadian Loan Parties, plus
(vii) fifty percent (50%) of Eligible Tools of Canadian Loan
Parties, minus
(viii) the Swap Reserve applicable to the Canadian Loan Parties
then in effect, minus
(ix) the aggregate amount of Dilution Reserves and Required
Reserves against Eligible Accounts Receivable, Eligible Unbilled
Accounts Receivable and Eligible Inventory of Canadian Loan Parties;
provided that Agent, in the exercise of its Permitted Discretion, may
--------
(a) increase or decrease such Required Reserves and (b) reduce the advance rates
provided in this definition,
10
or restore such advance rates to any level equal to or below the advance rates
in effect as of the Closing Date.
"Canadian Subsidiary Note" means that certain Intercompany Note dated
on or about the date hereof, executed by Canadian Loan Parties in favor of
Borrower, as such promissory note may be amended from time to time thereafter to
the extent permitted under subsection 7.15.
"Canadian Utilization of Surplus Capacity" means, as of the date of
determination, the portion, if any, of the Surplus Capacity then in effect
allocated by Borrower to the Canadian Loan Parties.
"Capital Lease", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Cash" means money, currency or a credit balance in a Deposit Account.
"Cash Equivalents" means, as at any date of determination, (i)(a)
marketable securities (1) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (2) issued by any
agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (b) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, the highest rating
obtainable from either Standard & Poor's Ratings Services ("S&P") or Xxxxx'x
Investors Service, Inc. ("Moody's"); (c) commercial paper maturing no more than
one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody's; (d) certificates of deposit or bankers' acceptances maturing within one
year after such date and issued or accepted by any Lender or by any commercial
bank organized under the laws of the United States of America or any state
thereof or the District of Columbia that (1) is at least "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (2) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; and (e) shares of any money market mutual fund that (1)
has at least 95% of its assets invested continuously in the types of investments
referred to in clauses (a) and (b) above, (2) has net assets of not less than
$500,000,000, and (3) has the highest rating obtainable from either S&P or
Moody's; (ii) with respect to any Foreign Loan Party, investments in the
applicable Approved Jurisdiction that are comparable in term and credit quality
to those described in the foregoing clauses (i)(a)-(e), as approved by Agent in
the exercise of its reasonable judgment; (iii) with respect to Borrower, such
other investments in accordance with Borrower's Domestic Short-Term Investment
Policy dated as of June 20, 2001 in the form approved by Agent prior to the
Closing Date, and such amendments and modifications thereof as may from time to
time be approved by Agent; and (iv) with respect to Industries Insurance, Inc.
such other investments in accordance with Industries Insurance Inc.'s Investment
Policy dated as of May 4, 1992 in the form approved by Agent prior to the
Closing Date, and such amendments and modifications thereof as may from time to
time be approved by Agent.
11
"CEP" means all components, goods, merchandise or spare parts (but not
including any Raw Materials or goods authorized for return) which are held for
sale or lease by a Person in connection with the servicing, maintenance or
repair of Finished Goods sold or leased by such Person under such Person's
component exchange program or encore program, as applicable.
"Change in Control" means any of the following: (i) any Person acting
alone or in concert with one or more other Persons shall have acquired
beneficial ownership, directly or indirectly, of Securities of Borrower (or
other Securities convertible into such Securities) representing 50% or more of
the combined voting power of all Securities of Borrower entitled to vote in the
election of members of the Governing Body of Borrower, other than Securities
having such power only by reason of the happening of a contingency; (ii) the
occurrence of a change in the composition of the Governing Body of Borrower such
that a majority of the members of any such Governing Body are not Continuing
Members; and (iii) the occurrence of any "Change in Control" as defined in the
New Senior Note Indenture. As used herein, the term "beneficially own" or
"beneficial ownership" shall have the meaning set forth in the Exchange Act and
the rules and regulations promulgated thereunder.
"Closing Date" means July 10, 2001, on which the initial Loans are
made.
"Closing Date Mortgage Policies" has the meaning set forth in
subsection 4.1M.
"Closing Date Mortgaged Property" has the meaning set forth in
subsection 4.1M.
"Closing Date Mortgages" has the meaning set forth in subsection 4.1M.
"Collateral" means, collectively, all of the real, personal and mixed
property (including capital stock and other ownership interests) in which Liens
are purported to be granted pursuant to the Collateral Documents as security for
any or all of the Obligations.
"Collateral Access Agreement" means any landlord waiver, mortgagee
waiver, bailee letter or any similar acknowledgement agreement of any landlord,
mortgagee or bailee in respect of any Real Property Asset where any Inventory or
machinery and equipment is located or any warehouseman or processor in
possession of Inventory or machinery and equipment, substantially in the form of
Exhibit XII annexed hereto, with such changes thereto as may be agreed to by
-----------
Agent.
"Collateral Account" has the meaning assigned to that term in the
Security Agreement.
"Collateral Documents" means the Security Agreement, the Foreign
Pledge Agreements, the Blocked Account Agreements, the Collateral Access
Agreements, the Mortgages, the Lock Box Agreements and all other instruments or
documents delivered by any Loan Party pursuant to this Agreement or any of the
other Loan Documents in order to grant to Agent, on behalf of Lenders, a Lien on
any real, personal or mixed property of that Loan Party, including without
limitation Liens granted to Borrower (or to a security trustee in lieu of
Borrower) under the Intercompany Notes, the Intercompany Collateral Documents,
the
12
Intercompany Guaranties, the Beloit Collateral Documents, Beloit Note and Beloit
Note Guaranty, which Liens have been assigned to Agent (or which security
trustee agrees to act in accordance with Agent's instructions), as security for
any or all of the Obligations. For purposes of this Agreement, references to
"Liens in favor of Agent" shall mean and include Liens described in the
preceding sentence, whether such Liens were granted by a Loan Party initially in
favor of Agent or initially in favor of Borrower (or a security trustee in lieu
of Borrower).
"Commercial Letter of Credit" means any letter of credit or similar
instrument issued for the purpose of providing the primary payment mechanism in
connection with the purchase of materials, goods or services by Borrower or any
of its Subsidiaries in the ordinary course of business of Borrower or such
Subsidiary.
"Commitments" means the commitments of Lenders to make Loans as set
forth in subsection 2.1A.
"Company Bankruptcy Proceeding" means the proceedings under Chapter 11
of the Bankruptcy Code with respect to Borrower and Debtor Subsidiaries
initiated by Borrower and Debtor Subsidiaries on June 7, 1999 and June 28, 1999
in the Bankruptcy Court, Case No. 99-2171 (PJW) jointly administered.
"Compliance Certificate" means a certificate substantially in the form
of Exhibit VI annexed hereto delivered to Agent and Lenders by Borrower pursuant
----------
to subsection 6.1(iv).
"Concentration Accounts" means, collectively, the BT Concentration
Accounts and the Other Bank Concentration Accounts.
"Concentration Bank" means BTCo or any commercial bank satisfactory to
Agent at which any Loan Party maintains a Concentration Account.
"Confirmation Order" means that certain Order Confirming Third Amended
Joint Plan of Reorganization of the Debtors under Chapter 11 of the Bankruptcy
Code and Approving Technical Modifications Thereof entered by the Bankruptcy
Court on May 18, 2001 in the Company Bankruptcy Proceeding, without
modification, revision or amendment.
"Conforming Leasehold Interest" means any Recorded Leasehold Interest
as to which the lessor has agreed in writing for the benefit of Agent (which
writing has been delivered to Agent), whether under the terms of the applicable
lease, under the terms of a Landlord Consent and Estoppel, or otherwise, to the
matters described in the definition of "Landlord Consent and Estoppel," which
interest, if a subleasehold or sub-subleasehold interest, is not subject to any
contrary restrictions contained in a superior lease or sublease.
"Consolidated Borrowing Base" means, as at any date of determination,
an aggregate amount equal to the sum of (i) the Domestic Borrowing Base, (ii)
the Australian Joy Subsidiary Borrowing Base, (iii) the Australian P&H
Subsidiary Borrowing Base, (iv) the Canadian Subsidiary Borrowing Base, and (v)
the UK Subsidiary Borrowing Base; provided that, irrespective of the aggregate
amount of Unbilled Accounts Receivable contained in the Consolidated Borrowing
Base, the aggregate amount of Loan proceeds advanced with respect to
13
aggregate Unbilled Accounts Receivable shall not at any time exceed $12,000,000;
and provided further that the aggregate amounts of Eligible Intellectual
Property, Eligible Machinery and Equipment and Eligible Real Estate contained in
the Consolidated Borrowing Base shall not, as of the dates set forth below,
exceed the correlative amount indicated:
------------------------------------------------------------------------------------------------------------
Dates Maximum Amount
------------------------------------------------------------------------------------------------------------
Eligible Intellectual Property
------------------------------------------------------------------------------------------------------------
Closing Date - July 30, 2001 $40,000,000
------------------------------------------------------------------------------------------------------------
July 31, 2001 - October 30, 2001 $25,000,000
------------------------------------------------------------------------------------------------------------
October 31, 2001 - January 30, 2002 $10,000,000
------------------------------------------------------------------------------------------------------------
January 31, 2002 and thereafter $ 0
------------------------------------------------------------------------------------------------------------
Eligible Real Estate
------------------------------------------------------------------------------------------------------------
Closing Date - January 30, 2002 $30,000,000
------------------------------------------------------------------------------------------------------------
January 31, 2002 - April 29, 2002 $25,000,000
------------------------------------------------------------------------------------------------------------
April 30, 2002 - July 30, 2002 $10,000,000
------------------------------------------------------------------------------------------------------------
July 31, 2002 and thereafter $ 0
------------------------------------------------------------------------------------------------------------
Eligible Machinery & Equipment
------------------------------------------------------------------------------------------------------------
Closing - July 30, 2002 $40,000,000
------------------------------------------------------------------------------------------------------------
July 31, 2002 - October 30, 2002 $25,000,000
------------------------------------------------------------------------------------------------------------
October 31, 2002 and thereafter $ 0
------------------------------------------------------------------------------------------------------------
"Consolidated Capital Expenditures" means, for any period, the
aggregate of all expenditures (whether paid in cash or other consideration or
accrued as a liability and including that portion of Capital Leases which is
capitalized on the consolidated balance sheet of Borrower and its Subsidiaries)
by Borrower and its Subsidiaries during that period that, in conformity with
GAAP, are included in "additions to property, plant or equipment" or comparable
items reflected in the consolidated statement of cash flows of Borrower and its
Subsidiaries.
"Consolidated Current Assets" means, as at any date of determination,
the total assets of Borrower and its Subsidiaries on a consolidated basis which
may properly be classified as current assets in conformity with GAAP, but
excluding Cash and Cash Equivalents.
14
"Consolidated Current Liabilities" means, as at any date of
determination, the total liabilities of Borrower and its Subsidiaries on a
consolidated basis which may properly be classified as current liabilities in
conformity with GAAP.
"Consolidated EBITDA" means, for any period, the sum, without
duplication, of the amounts for such period of (i) Consolidated Net Income, (ii)
Consolidated Interest Expense, (iii) provisions for taxes based on income, (iv)
total depreciation expense, (v) total amortization expense, (vi)(a) pre-
emergence reorganization expenses (as determined in conformity with GAAP)
related to the Company Bankruptcy Proceeding, and (b) post-emergence
reorganization expenses (in conformity with GAAP as it would apply if such
expenses were incurred pre-emergence) related to the Company Bankruptcy
Proceeding, up to a maximum aggregate amount under the foregoing clause (b) of
$3,000,000, and (vii) other non-cash items deducted in the calculation of
Consolidated Net Income (other than any such non-cash item to the extent that it
represents an accrual of or reserve for cash expenditure in any future period)
less other non-cash items added in the calculation of Consolidated Net Income
(other than any such non-cash item to the extent that it will result in the
receipt of cash payments in any future period), all of the foregoing as
determined on a consolidated basis for Borrower and its Subsidiaries in
conformity with GAAP.
"Consolidated Excess Cash Flow" means, for any period, an amount (if
positive) equal to (i) the sum, without duplication, of the amounts for such
period of (a) Consolidated EBITDA and (b) the Consolidated Working Capital
Adjustment minus (ii) the sum, without duplication, of the amounts for such
period of (a) voluntary and scheduled repayments of Consolidated Total Debt
(excluding repayments of Revolving Loans except to the extent the Revolving Loan
Commitments are permanently reduced in connection with such repayments), (b)
Consolidated Capital Expenditures (net of any proceeds of any related financings
with respect to such expenditures), (c) Consolidated Interest Expense, (d) the
provision for current taxes based on income of Borrower and its Subsidiaries and
payable in cash with respect to such period, and (e)(i) pre-emergence
reorganization expenses (as determined in conformity with GAAP) related to the
Company Bankruptcy Proceeding, and (ii) post-emergence reorganization expenses
(in conformity with GAAP as it would apply if such expenses were incurred pre-
emergence) related to the Company Bankruptcy Proceeding, up to a maximum
aggregate amount under the foregoing clause (ii) of $3,000,000; provided that
for determining the Consolidated Excess Cash Flow with respect to Fiscal Year
2001, the applicable period shall be from the date of the emergence of Borrower
and the Debtor Subsidiaries from the Company Bankruptcy Proceeding to the last
day of such Fiscal Year.
"Consolidated Interest Expense" means, for any period, total interest
expense (including that portion attributable to Capital Leases in accordance
with GAAP and capitalized interest) of Borrower and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness of Borrower and
its Subsidiaries, including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under Interest Rate Agreements of the type
described in clause (i) of the definition of "Interest Rate Agreements" in this
subsection 1.1.
15
"Consolidated Leverage Ratio" means, as at any date, the ratio of (a)
Consolidated Total Debt as at such date to (b) Consolidated EBITDA for the
consecutive four Fiscal Quarters ending on the last day of the most recently
ended Fiscal Quarter.
"Consolidated Net Income" means, for any period, the net income (or
loss) of Borrower and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in conformity with GAAP; provided
that there shall be excluded (i) the income (or loss) of any Person (other than
a Subsidiary of Borrower) in which any other Person (other than Borrower or any
of its Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Borrower or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Borrower or is
merged into or consolidated with Borrower or any of its Subsidiaries or that
Person's assets are acquired by Borrower or any of its Subsidiaries, (iii) the
income of any Subsidiary of Borrower to the extent that the declaration or
payment of dividends or similar distributions by that Subsidiary of that income
is not at the time permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary; provided that the income of Borrower's
Subsidiaries in the United Kingdom which would otherwise be excluded hereunder
as a result of statutes, rules or governmental regulations restricting the
declaration or payment of dividends due to deficits in such Subsidiaries'
capital accounts, to insufficient capital or surplus or similar restrictions
shall nonetheless be includible for purposes of determining Consolidated Net
Income to the extent that the aggregate intercompany loans owed by such UK
Subsidiaries to Borrower and Guarantors are greater than such income, (iv) any
after-tax gains or losses attributable to Asset Sales or returned surplus assets
of any Pension Plan, and (v) (to the extent not included in clauses (i) through
(iv) above) any net extraordinary non-cash gains or net non-cash extraordinary
losses.
"Consolidated Rental Payments" means, for any period, the aggregate
amount of all rents paid or payable by Borrower and its Subsidiaries on a
consolidated basis during that period under all Capital Leases and Operating
Leases to which Borrower or any of its Subsidiaries is a party as lessee.
"Consolidated Total Debt" means, as at any date of determination, the
aggregate stated balance sheet amount of all Indebtedness of Borrower and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
"Consolidated Working Capital" means, as at any date of determination,
the excess (or deficit) of Consolidated Current Assets over Consolidated Current
Liabilities.
"Consolidated Working Capital Adjustment" means, for any period on a
consolidated basis, the amount (which may be a negative number) by which
Consolidated Working Capital as of the beginning of such period exceeds (or is
less than) Consolidated Working Capital as of the end of such period; provided
that such amount shall be adjusted to eliminate the effect of non-cash
adjustments as a result of fresh-start accounting in connection with, and to
exclude any reclassification of debt resulting from, the emergence of Borrower
and the Debtor Subsidiaries from the Company Bankruptcy Proceeding.
16
"Consolidating" means, with respect to the presentation of financial
information, consolidating for Borrower's surface mining equipment and
underground mining equipment businesses.
"Contingent Obligation", as applied to any Person, means, without
duplication, any direct or indirect liability, contingent or otherwise, of that
Person (i) with respect to any Indebtedness, lease, dividend or other obligation
of another if the primary purpose or intent thereof by the Person incurring the
Contingent Obligation is to provide assurance to the obligee of such obligation
of another that such obligation of another will be paid or discharged, or that
any agreements relating thereto will be complied with, or that the holders of
such obligation will be protected (in whole or in part) against loss in respect
thereof, (ii) with respect to any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable for reimbursement of
drawings, or (iii) under Hedge Agreements. Contingent Obligations shall
include, without limitation, (a) the direct or indirect guaranty, endorsement
(otherwise than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse (to the extent of such recourse) or sale
with recourse (to the extent of such recourse) by such Person of the obligation
of another, (b) the obligation to make take-or-pay or similar payments if
required regardless of non-performance by any other party or parties to an
agreement, and (c) any liability of such Person for the obligation of another
through any agreement (contingent or otherwise) (X) to purchase, repurchase or
otherwise acquire such obligation or any security therefor, or to provide funds
for the payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise) or (Y) to
maintain the solvency or any balance sheet item, level of income or financial
condition of another if, in the case of any agreement described under subclauses
(X) or (Y) of this sentence, the primary purpose or intent thereof is as
described in the preceding sentence. Contingent Obligations shall not include
product or performance warranties or other contractual obligations given by a
Person in connection with the sale of such Person's products or services in the
ordinary course of such Person's business. The amount of any Contingent
Obligation shall be equal to the amount of the obligation so guaranteed or
otherwise supported or, if less, the amount to which such Contingent Obligation
is specifically limited.
"Continuing Member" means, as of any date of determination any member
of the Governing Body of Borrower who (i) was a member of such Governing Body on
the Closing Date or (ii) was nominated for election or elected to such Governing
Body with the affirmative vote of a majority of the members who were either
members of such Governing Body on the Closing Date or whose nomination or
election was previously so approved.
"Contractual Obligation", as applied to any Person, means any material
provision of any Security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.
"Daily Funding Lender" means Agent, in its individual capacity as a
Lender hereunder.
"Debtor Subsidiaries" means each of the Subsidiaries of Borrower that
was a debtor in the Company Bankruptcy Proceeding.
17
"Deposit Account" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
"Dilution" means, for any period with respect to all Loan Parties, the
fraction, expressed as a percentage, the numerator of which is the aggregate
amount of reductions in the Accounts of the Loan Parties for such period other
than by reason of dollar-for-dollar cash payment, and the denominator of which
is the aggregate dollar amount of the sales of the Loan Parties for such period.
"Dilution Reserves" means, as of any date of determination, such
reserves as Agent may from time to time establish and revise with respect to the
Loan Parties in its Permitted Discretion in such amounts as Agent may determine
in its Permitted Discretion to reflect the Dilution as of such date with respect
to the Accounts of such Loan Parties for the immediately preceding three-month
period to the extent such Dilution exceeds five percent (5%).
"DIP Facility" means that certain Revolving Credit, Term Loan and
Guaranty Agreement dated as of June 7, 1999, as amended through the Closing
Date, entered into by and among Borrower and Debtor Subsidiaries, each as a
Debtor and a Debtor-in-Possession under Chapter 11 of the Bankruptcy Code, Chase
Manhattan Bank, the other Banks named therein, and Chase Securities, Inc.
"Disclosure Statement" means that certain Third Amended Disclosure
Statement for Joint Plan of Reorganization of Harnischfeger Industries, Inc., et
al., under Chapter 11 of the Bankruptcy Code.
"Dollar Equivalents" means Dollars or, on any date when an amount
expressed in a currency other than Dollars is to be determined in Dollars, an
equivalent amount of Dollars determined at the nominal rate of exchange quoted
by Agent in New York City, not later than 9:00 A.M. (New York time) on the date
of determination, to prime banks in New York City for the spot purchase in the
New York foreign exchange market of Dollars with such other currency.
"Dollars" and the sign "$" mean the lawful money of the United States
of America.
"Domestic Borrowing Base" means, as at any date of determination, an
aggregate amount, in Dollar Equivalents if denominated in an Approved Currency
other than US Dollars, equal to:
(i) eighty-five percent (85%) of Eligible Accounts Receivable
of Domestic Loan Parties, plus
(ii) thirty-five percent (35%) of Eligible Unbilled Accounts
Receivable of Domestic Loan Parties, plus
(iii) fifty percent (50%) of Eligible Raw Materials of Domestic
Loan Parties, plus
18
(iv) fifty percent (50%) of Eligible Finished Goods of Domestic
Loan Parties, plus
(v) fifty percent (50%) of Eligible CEP of Domestic Loan
Parties, plus
(vi) thirty-five percent (35%) of Eligible Work-in-Process of
Domestic Loan Parties, plus
(vii) fifty percent (50%) of Eligible Tools of Domestic Loan
Parties, plus
(viii) the lesser of (x) ninety percent (90%) of the Orderly
Liquidation Value of Eligible Machinery and Equipment of Domestic Loan
Parties and (y) an amount equal to $33,000,000 on or prior to July 30,
2002, $21,000,000 during the period from July 31, 2002 through October
30, 2002 and zero thereafter, plus
(ix) the lesser of (x) sixty percent (60%) of the Appraised
Fair Market Value of Eligible Real Estate of Domestic Loan Parties and
(y) an amount equal to $21,000,000 on or prior to January 30, 2002,
$18,000,000 during the period from January 31, 2002 through April 29,
2002, $7,000,000 during the period from April 30, 2002 through July
30, 2002 and zero thereafter, plus
(x) the lesser of (x) thirty percent (30%) of the Appraised
Fair Market Value of Eligible Intellectual Property of all Loan
Parties and (y) an amount equal to $40,000,000 on or prior to July
30,2001, $25,000,000 during the period from July 31, 2001 through
October 30, 2001, $10,000,000 during the period from October 31, 2001
through January 30, 2002 and zero thereafter, minus
(xi) the Swap Reserve applicable to the Domestic Loan Parties
then in effect; minus
(xii) the aggregate amount of Dilution Reserves and Required
Reserves against Eligible Accounts Receivable, Eligible Unbilled
Accounts Receivable, Eligible Inventory, Eligible Machinery and
Equipment and Eligible Real Estate of Domestic Loan Parties and
Eligible Intellectual Property of all Loan Parties;
provided that Agent, in the exercise of its Permitted Discretion, may
--------
(a) increase or decrease such Required Reserves and (b) reduce the advance rates
provided in this definition, or restore such advance rates to any level equal to
or below the advance rates in effect as of the Closing Date.
"Domestic Loan Parties" means Borrower and Guarantors.
"Domestic Subsidiary" means any Subsidiary of any Person that is
incorporated or organized under the laws of the United States of America, any
state thereof or in the District of Columbia.
19
"ECU" means the European Currency Unit that is from time to time used
as the unit of account of the EU and, in the event of any change to the ECU as
may be made by the EU from time to time, the definition of "ECU" used herein
shall be changed accordingly.
"Eligible Accounts Receivable" means, with respect to any Person,
Accounts of such Person deemed by Agent in the exercise of its Permitted
Discretion to be eligible for inclusion in the calculation of the applicable
Borrowing Base. In determining the amount to be so included, the face amount of
such Accounts shall be reduced by the amount of the applicable portion of the
Static Reserve then in effect. Unless otherwise approved in writing by all
Lenders, an Account shall not be an Eligible Account Receivable if:
(a) it arises out of a sale made by such Person to an Affiliate
of such Person; or
(b) (i) it is unpaid more than 60 days from the original payment
due date, in the case of a due-dating aged Account on which the terms
of payment do not exceed 30 days, (ii) it is unpaid more than 90 days
from original invoice date, in the case of an invoice-dating aged
Account on which the terms of payment do not exceed 30 days, and (iii)
in the case of an Account with extended payment terms that exceed 30
days from the date of invoice, it is unpaid upon the earlier to occur
of (x) more than 30 days after the original payment due date or (y)
more than 120 days after the date of invoice; or
(c) it is from the same account debtor or its Affiliate and
fifty percent (50%) or more of all Accounts from that account debtor
(and its Affiliates) are ineligible under (b) above; or
(d) when aggregated with all other Accounts of an account
debtor, such Account exceeds 10% in face value of all Accounts of such
Person then outstanding, as determined on a consolidated basis for
Borrower and all other Loan Parties, but only to the extent of such
excess, unless such excess is supported by an irrevocable letter of
credit satisfactory to Agent (as to form, substance and issuer) and
assigned to and directly drawable by Agent; or
(e) the account debtor for such Account is a creditor of such
Loan Party, has or has asserted a right of setoff against such Person,
or has disputed its liability or otherwise has made any claim with
respect to such Account or any other Account which has not been
resolved, in each case to the extent of the amount owed by such Person
to such account debtor, the amount of such actual or asserted right of
setoff, or the amount of such dispute or claim, as the case may be; or
(f) the account debtor is (or its assets are) the subject of an
Insolvency Event; or
(g) (i) such Account is not payable in an Approved Currency or
(ii) the account debtor for such Account is located outside of an
Approved Jurisdiction; except in each case to the extent that such
Account is supported by an irrevocable
20
letter of credit or insurance satisfactory to Agent (as to form,
substance and issuer or insurer) and assigned to and, in the case of a
letter of credit, directly drawable by Agent; or
(h) the sale to the account debtor is on a xxxx-and-hold,
guarantied sale, sale-and-return, sale on approval or consignment
basis or made pursuant to any other written agreement providing for
repurchase or return other than any transaction subject to a Xxxx-and-
Hold Agreement; or
(i) the account debtor is any federal, state, local, provincial
or other comparable or similar Government Authority, provided that if
such account debtor is the United States of America or any department,
agency or instrumentality thereof, such Account shall not be
ineligible solely as a result of this clause (i) if the applicable
Person duly assigns its rights to payment of such Account to Agent
pursuant to the Assignment of Claims Act of 1940, as amended (31
U.S.C. (S)(S) 3727 et seq.); or
(j) the goods giving rise to such Account have not been shipped
and delivered to the account debtor (other than goods subject to a
Xxxx-and-Hold Agreement), the services giving rise to such Account
have not been performed, or such Account otherwise does not represent
a final sale; or
(k) such Account does not comply with all Requirements of Law,
including without limitation the Federal Consumer Credit Protection
Act, the Federal Truth in Lending Act and Regulation Z of the Board of
Governors of the Federal Reserve System or any comparable or similar
laws now or hereafter in effect in any other Approved Jurisdiction; or
(l) such Account is subject to any adverse security deposit or
other similar advance made by or for the benefit of the applicable
account debtor but only to the extent of such adverse security
deposit, progress payment or similar advance; or
(m) it is not subject to a valid and perfected First Priority
Lien in favor of Agent or does not otherwise conform to the
representations and warranties contained in the Loan Documents;
provided that Agent, in the exercise of its Permitted Discretion, may impose
additional restrictions (or may, in the exercise of its reasonable discretion,
eliminate the same) to the standards of eligibility set forth in this
definition. For purposes of clause (b) above, whether an Account is "due-dated"
or "invoice-dated" shall be determined based upon the classification of such
Account on the Borrower's or its Subsidiaries' aged analysis reports as prepared
in a manner consistent with historical practices and procedures. In determining
the aggregate amount of Accounts from the same account debtor and Affiliates
thereof that are unpaid more than 60 days from the due date pursuant to clause
(c) above, there shall be excluded the amount of any net credit balances due and
owing to the account debtor in respect of Account balances that are so unpaid.
21
"Eligible Assignee" means (A) (i) a commercial bank organized under
the laws of the United States or any state thereof; (ii) a savings and loan
association or savings bank organized under the laws of the United States or any
state thereof; (iii) a commercial bank organized under the laws of any other
country or a political subdivision thereof; provided that (x) such bank is
acting through a branch or agency located in the United States or (y) such bank
is organized under the laws of a country that is a member of the Organization
for Economic Cooperation and Development or a political subdivision of such
country; and (iv) any other entity which is an "accredited investor" (as defined
in Regulation D under the Securities Act) which regularly extends credit or buys
loans of the general type made pursuant to this Agreement as one of its
businesses including, but not limited to, insurance companies, mutual funds and
lease financing companies, in each case (under clauses (i) through (iv) above)
that is reasonably acceptable to Agent; and (B) any Lender, any Affiliate of any
Lender and any Affiliated Fund of any Lender; provided that neither Borrower nor
--------
any Affiliate of Borrower shall be an Eligible Assignee.
"Eligible CEP" means CEP which constitute Eligible Inventory.
"Eligible Finished Goods" means Finished Goods which constitute
Eligible Inventory.
"Eligible Intellectual Property" means, with respect to any Person,
the aggregate amount of Intellectual Property of such Person, valued at the
Appraised Fair Market Value of Eligible Intellectual Property; provided that,
unless otherwise approved in writing by all Lenders, an item of Intellectual
Property shall not be included in Eligible Intellectual Property if it is not
subject to a valid and perfected First Priority Lien in favor of Agent or does
not otherwise conform to the representations and warranties contained in the
Loan Documents; provided further that Agent, in the exercise of its Permitted
Discretion, may impose additional restrictions (or may, in the exercise of its
reasonable discretion, eliminate the same) to the standards of eligibility set
forth in this definition.
"Eligible Inventory" means, with respect to any Person, the aggregate
amount of Raw Materials, Finished Goods, CEP, Tools and Work-in-Process of such
Person deemed by Agent in the exercise of its Permitted Discretion to be
eligible for inclusion in the calculation of the Borrowing Base. In determining
the amount to be so included, Raw Materials, Finished Goods, CEP, Tools and
Work-in-Process shall be valued at the lower of cost or market on a first-in,
first-out basis consistent with such Person's historical practices net of any
shipping or freight allowances and net of any freight charges included in Raw
Materials (capped at 2% of the Raw Materials cost), and such amounts shall be
reduced by the applicable portion of the Static Reserve then in effect. Unless
otherwise approved in writing by all Lenders, an item of Raw Materials, Finished
Goods, CEP, Tools or Work-in-Process shall not be included in Eligible Inventory
if:
(a) it is not owned solely by such Person or such Person does
not have good, valid and marketable title thereto; or
(b) it is not located in an Approved Jurisdiction; or
22
(c) it is not located on property owned or leased by such Person
or in a contract warehouse or property owned or leased by a customer
of such Person, in each case subject to a Collateral Access Agreement
executed by any applicable mortgagee, lessor or contract warehouseman
or customer, as the case may be, and segregated or otherwise
separately identifiable from goods of others, if any, stored on the
premises (provided that the failure to deliver any Collateral Access
Agreement required under this definition shall not render the
applicable item ineligible (a) during the first thirty (30) days
immediately following the Closing Date, or (b) with respect to items
located in a leased warehouse or on leased property in or on which the
aggregate amount of such items (valued in accordance with this
definition) is less than $5,000,000, to the extent Agent establishes
reserves in an amount at least equal to three (3) months' rent payable
thereunder); or
(d) it is not subject to a valid and perfected First Priority
Lien in favor of Agent except, with respect to Raw Materials, Finished
Goods, CEP, Tools and Work-in-Process stored at sites described in
clause (c) above, for Liens for unpaid rent or normal and customary
warehousing charges; or
(e) except with respect to Work-in-Process, it consists of goods
returned or rejected by such Person's customers or goods in transit to
third parties (other than to sites covered by a Collateral Access
Agreement); or
(f) it does not otherwise conform to the representations and
warranties contained in the Loan Documents;
(g) except with respect to Work-in-Process, it consists of goods
subject to a Xxxx-and-Hold Agreement;
(h) it constitutes profit generated, consistent with such
Person's historical accounting practices, as the result of the sale of
Inventory to, from or between such Person or any Subsidiary of such
Person and any of the Subsidiaries of such Person; or
(i) it is obsolete or slow-moving (as determined in accordance
with the historical practices of such Person and its Subsidiaries).
provided that Agent, in the exercise of its Permitted Discretion, may impose
additional restrictions (or may, in the exercise of its reasonable discretion,
eliminate the same) to the standards of eligibility set forth in this
definition.
"Eligible Machinery and Equipment" means with respect to any Person,
the aggregate amount of machinery and equipment of such Person, valued at the
Orderly Liquidation Value of such machinery and equipment; provided that, unless
otherwise approved in writing by all Lenders, an item of machinery and equipment
shall not be included in Eligible Machinery and Equipment if it is not subject
to a valid and perfected First Priority Lien in favor of Agent or does not
otherwise conform to the representations and warranties contained in the Loan
Documents; provided further that Agent, in the exercise of its Permitted
Discretion, may impose
23
additional restrictions (or may in the exercise of its reasonable discretion
eliminate the same) to the standards of eligibility set forth in this
definition.
"Eligible Raw Materials" means Raw Materials which constitute Eligible
Inventory.
"Eligible Real Estate" means , with respect to any Person, the
aggregate amount of Real Property Assets of such Person, valued at the Appraised
Fair Market Value of Eligible Real Estate; provided that, unless otherwise
approved in writing by all Lenders, an item of Real Property Assets shall not be
included in Eligible Real Estate if it is not subject to a valid and perfected
First Priority Lien in favor of Agent or does not otherwise conform to the
representations and warranties contained in the Loan Documents; provided further
that (i) until such time as Agent receives a title report on the Xxxxxxxx Xxxx,
Xxxxxxxxx, Xxxxxx Xxxxxxx, properties establishing to its satisfaction that
there are no prior encumbrances on such properties other than any encumbrances
approved by Agent in its discretion, such properties shall be excluded from the
UK Subsidiary Borrowing Base, and (ii) Agent, in the exercise of its Permitted
Discretion, may impose additional restrictions (or may in the exercise of its
reasonable discretion eliminate the same) to the standards of eligibility set
forth in this definition.
"Eligible Tools" means Tools which constitute Eligible Inventory.
"Eligible Unbilled Accounts Receivable" means with respect to any
Person, the accumulated work in progress costs under percentage-of-completion
contracts that have been recognized in accordance with GAAP as cost of sales
that are not yet able to be billed to the customer under the terms of the
applicable contract, as deemed by Agent in the exercise of its Permitted
Discretion to be eligible for inclusion in the calculation of the Borrowing
Base. Unless otherwise approved in writing by all Lenders, an item of unbilled
accounts receivable shall not be included in Eligible Unbilled Accounts
Receivable if it is not subject to a valid and perfected First Priority Lien in
favor of Agent , does not otherwise conform to the representations and
warranties contained in the Loan Documents or to the extent constituting an
Advance Payment Liability; provided that Agent, in the exercise of its Permitted
Discretion, may impose additional restrictions (or may in the exercise of its
reasonable discretion eliminate the same) to the standards of eligibility set
forth in this definition. In determining the amount to be so included, the face
amount of such Accounts shall be reduced by the amount of the applicable portion
of the Static Reserve then in effect.
"Eligible Work-in-Process" means Work-in-Process which constitutes
Eligible Inventory.
"Employee Benefit Plan" means any "employee benefit plan" as defined
in Section 3(3) of ERISA which is or was maintained or contributed to by
Borrower, any of the Subsidiaries of Borrower or any of their respective ERISA
Affiliates.
"Environmental Claim" means any notice of violation, claim, action,
suit, enforcement proceeding or directive, demand, abatement order or other
order or directive (conditional or otherwise), by any Government Authority or
any other Person, arising (i) pursuant to or in connection with any actual or
alleged violation of any Environmental Law, (ii)
24
in connection with any Hazardous Materials or any actual or alleged Hazardous
Materials Activity, or (iii) in connection with any actual or alleged damage,
injury, threat or harm to health, safety, natural resources or the environment.
"Environmental Laws" means any and all current or future statutes,
ordinances, orders, rules, regulations, judgments, Governmental Authorizations,
or any other requirements of Government Authorities or common law duties or
obligations relating to (i) environmental matters, including those relating to
any Hazardous Materials Activity, (ii) the generation, use, storage,
transportation or disposal of Hazardous Materials, or (iii) occupational safety
and health, industrial hygiene or the protection of human, plant or animal
health or welfare, in any manner applicable to Borrower or any of its
Subsidiaries or any Facility.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor thereto and any similar or
comparable law of any other applicable Governmental Authority.
"ERISA Affiliate" means, as applied to any Person, (i) any corporation
that is a member of a controlled group of corporations within the meaning of
Section 414(b) of the Internal Revenue Code of which that Person is a member;
(ii) any trade or business (whether or not incorporated) that is a member of a
group of trades or businesses under common control within the meaning of Section
414(c) of the Internal Revenue Code of which that Person is a member; and (iii)
any member of an affiliated service group within the meaning of Section 414(m)
or (o) of the Internal Revenue Code of which that Person, any corporation
described in clause (i) above or any trade or business described in clause (ii)
above is a member. Any former ERISA Affiliate of a Person or any of its
Subsidiaries shall continue to be considered an ERISA Affiliate of such Person
or such Subsidiary within the meaning of this definition with respect to the
period such entity was an ERISA Affiliate of such Person or such Subsidiary and
with respect to liabilities arising after such period for which such Person or
such Subsidiary could be liable under the Internal Revenue Code or ERISA.
"ERISA Event" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice to the
PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived in accordance with Section 412(d) of the
Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan
pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such
plan in a distress termination described in Section 4041(c) of ERISA; (iv) the
withdrawal by Borrower, any of the Subsidiaries of Borrower or any of their
respective ERISA Affiliates from any Pension Plan with two or more contributing
sponsors or the termination of any such Pension Plan resulting in liability
pursuant to Section 4063 or 4064 of ERISA; (v) the institution by the PBGC of
proceedings to terminate any Pension Plan, or the occurrence of any event or
condition which might constitute grounds under ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan; (vi) the
imposition of liability on Borrower, any of the Subsidiaries of Borrower or any
of their
25
respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of
ERISA or by reason of the application of Section 4212(c) of ERISA; (vii) the
withdrawal of Borrower, any of the Subsidiaries of Borrower or any of their
respective ERISA Affiliates in a complete or partial withdrawal (within the
meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there
is any potential liability therefor, or the receipt by Borrower, any of the
Subsidiaries of Borrower or any of their respective ERISA Affiliates of notice
from any Multiemployer Plan that it is in reorganization or insolvency pursuant
to Section 4241 or 4245 of ERISA, or that it intends to terminate or has
terminated under Section 4041A or 4042 of ERISA; (viii) the assertion of a
material claim (other than routine claims for benefits) against any Employee
Benefit Plan other than a Multiemployer Plan or the assets thereof, or against
Borrower, any of the Subsidiaries of Borrower or any of their respective ERISA
Affiliates in connection with any Employee Benefit Plan; (ix) receipt from the
Internal Revenue Service of notice of the failure of any Pension Plan (or any
other Employee Benefit Plan intended to be qualified under Section 401(a) of the
Internal Revenue Code) to qualify under Section 401(a) of the Internal Revenue
Code, or the failure of any trust forming part of any Pension Plan to qualify
for exemption from taxation under Section 501(a) of the Internal Revenue Code;
or (x) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan.
"Eurodollar Rate Loans" means Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
"Eurodollar Rate Margin" means the margin over the Adjusted Eurodollar
Rate used in determining the rate of interest of Eurodollar Rate Loans pursuant
to subsection 2.2A.
"Event of Default" means each of the events set forth in Section 8.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"Exchange Rate" means, on any date when an amount expressed in a
currency other than Dollars is to be determined with respect to any Letter of
Credit, the nominal spot rate of exchange quoted by Agent in the New York
foreign exchange market for the purchase of such currency in exchange for
Dollars.
"Facilities" means all real property (including, without limitation,
all buildings, fixtures or other improvements located thereon) and related
facilities now, hereafter or heretofore owned, leased, operated or used by
Borrower or any of the Subsidiaries of Borrower or any of their respective
predecessors or Affiliates.
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Agent from three Federal funds brokers of recognized
standing selected by Agent.
26
"Financial Plan" has the meaning assigned to that term in subsection
6.1(xii).
"Finished Goods" means completed finished goods which are held for
sale or lease by a Person, including those held for display or demonstration,
but not including any Raw Materials, components, Work-in-Process, CEP or
materials used or consumed or to be used or consumed in the business of such
Person.
"First Priority" means, with respect to any Lien purported to be
created in any Collateral pursuant to any Collateral Document, that (i) such
Lien has priority over any other Lien (other than Permitted Encumbrances) on
such Collateral and (ii) such Lien is the only Lien (other than Permitted
Encumbrances and Liens permitted pursuant to subsection 7.2) to which such
Collateral is subject.
"Fiscal Quarter" means a fiscal quarter of any Fiscal Year.
"Fiscal Year" means the fiscal year of Borrower and its Subsidiaries
ending on October 31 of each calendar year.
"Flood Hazard Property" means a Closing Date Mortgaged Property or an
Additional Mortgaged Property located in an area designated by the Federal
Emergency Management Agency as having special flood or mud slide hazards.
"Foreign Borrowing Sublimits" means, individually and collectively,
the Australian Joy Subsidiary Borrowing Limit, the Australian PaH Subsidiary
Borrowing Limit, the Canadian Subsidiary Borrowing Limit and the UK Subsidiary
Borrowing Limit.
"Foreign Loan Parties" means, individually and collectively, the
Australian Loan Parties, the Canadian Loan Parties and the UK Loan Parties.
"Foreign Pledge Agreement" means each pledge agreement or similar
instrument governed by the laws of a country other than the United States,
executed in accordance with subsection 6.9 by Borrower or any Guarantor that
owns capital stock or other ownership interests of one or more Foreign
Subsidiaries, in form and substance reasonably satisfactory to Agent, as such
Foreign Pledge Agreement may be amended, supplemented or otherwise modified from
time to time.
"Foreign Subsidiary" means any Subsidiary of a Person that is not a
Domestic Subsidiary of such Person.
"Funding and Payment Office" means (i) the office of Agent located at
000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or (ii) such other office of Agent
as may from time to time hereafter be designated as such in a written notice
delivered by Agent to Borrower and each Lender.
"Funding Date" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the application thereof
set forth in subsection 1.2, generally accepted accounting principles set forth
in opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
27
the accounting profession, in each case as the same are applicable to the
circumstances as of the date of determination.
"Governing Body" means the board of directors or other body having the
power to direct or cause the direction of the management and policies of a
Person that is a corporation, partnership, trust or limited liability company.
"Government Authority" means any federal, state or local governmental
or regulatory body, commission, central bank, board, bureau, organ or
instrumentality or any political subdivision or department thereof, or any
court, located in the United States or in any other applicable jurisdiction
outside of the United States.
"Governmental Authorization" means any permit, license, registration,
authorization, plan, directive, consent order or consent decree of or from, or
notice to, any Government Authority.
"Guaranty" means the Guaranty or Guaranties executed and delivered on
the Closing Date by the existing Domestic Subsidiaries of Borrower other than
any Immaterial Subsidiary and other than Industries Insurance, Inc. and to be
executed and delivered by each additional Domestic Subsidiary of Borrower other
than any Immaterial Subsidiary from time to time thereafter in accordance with
subsection 6.9A, substantially in the form of Exhibit XV annexed hereto, as such
----------
Guaranty may be amended, supplemented or otherwise modified from time to time.
"Guarantors" means, at any time, individually and collectively, each
of the Domestic Subsidiaries of Borrower that is then a party to the Guaranty,
including such Subsidiaries that may become a party to the Guaranty pursuant to
the provisions of subsection 6.9A hereof.
"Hazardous Materials" means (i) any chemical, material or substance at
any time defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous waste," acutely
hazardous waste," "radioactive waste," "biohazardous waste," "pollutant," "toxic
pollutant," "contaminant," "restricted hazardous waste," "infectious waste,"
"toxic substances," or any other term or expression intended to define, list or
classify substances by reason of properties harmful to health, safety or the
indoor or outdoor environment (including harmful properties such as
ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive
toxicity, "TCLP toxicity" or "EP toxicity" or words of similar import under any
applicable Environmental Laws); (ii) any oil, petroleum, petroleum fraction or
petroleum derived substance; (iii) any drilling fluids, produced waters and
other wastes associated with the exploration, development or production of crude
oil, natural gas or geothermal resources; (iv) any flammable substances or
explosives; (v) any radioactive materials; (vi) any asbestos-containing
materials; (vii) urea formaldehyde foam insulation; (viii) polychlorinated
biphenyls; (ix) pesticides; and (x) any other chemical, material or substance,
exposure to which is prohibited, limited or regulated by any Government
Authority.
"Hazardous Materials Activity" means any past, current, proposed or
threatened activity, event or occurrence involving any Hazardous Materials,
including the use,
28
manufacture, possession, storage, holding, presence, existence, location,
Release, threatened Release, discharge, placement, generation, transportation,
processing, construction, treatment, abatement, removal, remediation, disposal,
disposition or handling of any Hazardous Materials, and any corrective action or
response action with respect to any of the foregoing.
"Headquarters Sale" shall mean the sale by Borrower of its former
corporate headquarters building located at 0000 Xxxxx Xxxx Xxxxx, Xx. Xxxxxxx,
Xxxxxxxxx.
"Hedge Agreement" means an Interest Rate Agreement designed to hedge
against fluctuations in, as applicable, interest rates or currency values.
"HULC" means Harnischfeger ULC, an unlimited liability company
organized under the laws of the United Kingdom.
"Immaterial Subsidiary" means any Subsidiary of the Borrower
identified as an Immaterial Domestic or Foreign Subsidiary on Schedule 5.1 and
------------
any Subsidiary of the Borrower formed or acquired after the Closing Date and
designated as an Immaterial Subsidiary on Schedule 5.1, which Subsidiary, (a)
------------
does not own assets with an aggregate value of greater than $250,000 (except for
American Longwall Face Conveyors, Inc. and American Longwall Roof Supports,
Inc., provided that each of the foregoing transfers its respective assets to Joy
Technologies, Inc. within 30 days after the Closing Date or such longer period
of time as may be approved by Agent), (b) does not generate revenues of greater
than $500,000 in any single Fiscal Year, and (c) is not actively engaged in any
ongoing business or operations, the assets and revenues of which are not
encumbered or otherwise subject to any claim in favor of any third party and
which has no indebtedness or other liabilities, contingent or otherwise, other
than any liabilities under any intercompany notes to Borrower and its
Subsidiaries and tax liabilities to the extent permitted pursuant to subsections
5.7 and 6.3; provided that all Immaterial Subsidiaries in the aggregate do not
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own assets with an aggregate value of greater than $5,000,000 or generate
revenues of greater than $5,000,000 in any single Fiscal Year or such amount in
excess of $5,000,000 as may be approved in writing by Agent. For purposes of
calculating the aggregate value of the assets and revenues of any Immaterial
Subsidiary under this definition, the value of any such intercompany promissory
note held as of the Closing Date (but not the proceeds of any payments thereon
other than regularly scheduled interest payments on intercompany promissory
notes) may be excluded.
"Indebtedness" as applied to any Person, means (i) all indebtedness
for borrowed money, (ii) that portion of obligations with respect to Capital
Leases that is properly classified as a liability on a balance sheet in
conformity with GAAP, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money,
including without limitation Contingent Obligations with respect to any letter
of credit, (iv) any obligation owed for all or any part of the deferred purchase
price of property or services (excluding any such obligations incurred under
ERISA), which purchase price is (a) due more than six months from the date of
incurrence of the obligation in respect thereof or (b) evidenced by a note or
similar written instrument, and (v) all indebtedness secured by any Lien on any
property or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is non-
recourse to the credit of that Person (provided that if such Indebtedness is
solely non-recourse, the amount of such Indebtedness shall be deemed not to
exceed the value of the applicable property or asset). Obligations under
29
Interest Rate Agreements constitute (X) in the case of Hedge Agreements,
Contingent Obligations, and (Y) in all other cases, Investments, and in neither
case constitute Indebtedness.
"Indemnitee" has the meaning assigned to that term in subsection 10.3.
"Insolvency Event" means, with respect to any Person, the occurrence
of any of the events described in subsection 8.6 or 8.7; provided that, solely
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for purposes of this definition, any references to Borrower or any of its
Subsidiaries in subsection 8.6 or 8.7 shall be deemed to be a reference to such
Person.
"Insolvency Laws" means the Bankruptcy Code or any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect in the United
States of America or any state thereof or any comparable or similar laws now or
hereafter in effect in any jurisdiction outside of the United States.
"Intellectual Property" means all patents, trademarks, tradenames,
copyrights, technology, software, know-how and processes used in or necessary
for the conduct of the business of Borrower and its Subsidiaries as currently
conducted that are material to the financial condition, business or operations
of Borrower and its Subsidiaries, taken as a whole.
"Intercompany Collateral Documents" means all such agreements,
documents and instruments that, in Agent's reasonable judgment, are required (a)
to evidence a First Priority Lien in favor of Borrower (or a security trustee in
lieu of Borrower) in substantially all real, personal and mixed property of each
of the Foreign Loan Parties as security for such Person's obligations under the
Intercompany Notes and (b) to evidence a First Priority Lien in favor of
Borrower (or a security trustee in lieu of Borrower) in substantially all real,
personal and mixed property of each Intercompany Note Guarantor as security for
such Intercompany Note Guarantor's obligations under the Intercompany Note
Guaranties to which it is party, all in form and substance reasonably
satisfactory to Agent, as such Intercompany Collateral Documents may be amended,
supplemented or otherwise modified from time to time to the extent permitted
under subsection 7.15.
"Intercompany Loans" means the proceeds of Loans advanced by Borrower
to Beloit or a Foreign Loan Party under, as applicable, the Beloit Note or an
Intercompany Note.
"Intercompany Notes" means those certain promissory notes made by each
of the Foreign Loan Parties to the order of Borrower, substantially in the form
of Exhibit V annexed hereto or as otherwise approved by Agent, and evidencing
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such Person's obligations to repay the credit extensions made by Borrower to
such Person pursuant to subsection 2.5A hereof, as such Intercompany Notes may
be amended, supplemented or otherwise modified from time to time to the extent
permitted under subsection 7.15.
"Intercompany Note Guarantors" means, individually and collectively,
each Subsidiary of each Foreign Loan Party that is a party to the Intercompany
Note Guaranty.
"Intercompany Note Guaranty" means that Intercompany Note Guaranty or
Intercompany Note Guaranties executed and delivered on the Closing Date by the
Intercompany Note Guarantors and to be executed and delivered by each additional
Intercompany Note
30
Guarantor from time to time thereafter in accordance with subsection 6.9A,
substantially in the form of Exhibit XV hereto (with such changes as may be
----------
be necessary or appropriate) or as otherwise approved by Agent, as such
Intercompany Note Guaranty may be amended, supplemented or otherwise modified
from time to time to the extent permitted under subsection 7.15.
"Interest Payment Date" means (i) with respect to any Base Rate Loan,
the first Business Day of each calendar month, commencing on the first such date
to occur after the Closing Date, and (ii) with respect to any Eurodollar Rate
Loan, the last day of each Interest Period applicable to such Loan; provided
that in the case of each Interest Period of six months or more "Interest Payment
Date" shall also include the date that is three months after the commencement of
such Interest Period.
"Interest Period" has the meaning assigned to that term in subsection
2.2B.
"Interest Rate Agreement" means (i) any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement, or (ii) any foreign exchange contract, currency swap
agreement, futures contract, option contract, synthetic cap or other similar
agreement or arrangement, in each case to which Borrower or any of its
Subsidiaries is a party.
"Interest Rate Determination Date" means, with respect to any Interest
Period, the second Business Day prior to the first day of such Interest Period.
"Interest Rate Exchanger" means any Lender that has entered into a
Lender Interest Rate Agreement pursuant to the terms of this Agreement.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter, and any successor
statute and any similar or comparable law of any other applicable Governmental
Authority.
"Inventory" means, with respect to any Person, all goods, merchandise
and other personal property which are held by such Person for sale or lease,
including those held for display or demonstration in the normal course of
business, including without limitation, Raw Materials, Work-in-Process, Finished
Goods, CEP and Tools.
"Investment" means (i) any direct or indirect purchase or other
acquisition by Borrower or any of its Subsidiaries of, or of a beneficial
interest in, any Securities of any other Person (including any Subsidiary of
Borrower), (ii) any direct or indirect redemption, retirement, purchase or other
acquisition for value, by any Subsidiary of Borrower from any Person other than
Borrower or any Guarantor that is a wholly-owned Subsidiary of Borrower, of any
equity Securities of such Subsidiary, (iii) any direct or indirect loan, advance
(other than advances to employees for moving, entertainment and travel expenses,
drawing accounts and similar expenditures in the ordinary course of business) or
capital contribution by Borrower or any of its Subsidiaries to any other Person
(other than a Guarantor), including all indebtedness and accounts receivable
from that other Person that are not current assets or did not arise from sales
to that other Person in the ordinary course of business, or (iv) Interest Rate
Agreements not constituting Hedge Agreements. The amount of any Investment
shall be the original cost of such
31
Investment plus the cost of all additions thereto, without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment.
"Issuing Lender" means, with respect to any Letter of Credit, the
Lender that agrees or is otherwise obligated to issue such Letter of Credit,
determined as provided in subsection 3.1B(ii); provided that any Issuing Lender
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may be an Affiliate of BTCo (including, without limitation, Deutsche Bank AG) so
long as (i) BTCo is a Lender under this Agreement and (ii) such Affiliate shall
have executed a counterpart of this Agreement on or prior to the date of any
issuance of any Letter of Credit by such Affiliate.
"Joint Venture" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
that in no event shall any Subsidiary of any Person be considered to be a Joint
Venture to which such Person is a party.
"Landlord Consent and Estoppel" means, with respect to any Leasehold
Property, a letter, certificate or other instrument in writing from the lessor
under the related lease, reasonably satisfactory in form and substance to Agent,
pursuant to which such lessor agrees, for the benefit of Agent, (i) that without
any further consent of such lessor or any further action on the part of the Loan
Party holding such Leasehold Property, such Leasehold Property may be encumbered
pursuant to a Mortgage and may be assigned to the purchaser at a foreclosure
sale or in a transfer in lieu of such a sale (and to a subsequent third party
assignee if Agent, any Lender, or an Affiliate of either so acquires such
Leasehold Property), (ii) that such lessor shall not terminate such lease as a
result of a default by such Loan Party thereunder without first giving Agent
notice of such default and at least 60 days (or, if such default cannot
reasonably be cured by Agent within such period, such longer period as may
reasonably be required) to cure such default, (iii) to the matters contained in
a Collateral Access Agreement, and (iv) to such other matters relating to such
Leasehold Property as Agent may reasonably request.
"Leasehold Property" means any leasehold interest of any Loan Party as
lessee under any lease of real property, other than any such leasehold interest
designated from time to time by Agent in its reasonable discretion as not being
required to be included in the Collateral.
"Lender" and "Lenders" means the Persons identified as "Lenders" and
listed on the signature pages of this Agreement, together with their successors
and permitted assigns pursuant to subsection 10.1, and the term "Lenders" shall
include BTCo as an Issuing Lender unless the context otherwise requires;
provided that the term "Lenders," when used in the context of a particular
Commitment, shall mean Lenders having that Commitment.
"Lender Interest Rate Agreement" means any Interest Rate Agreement
with respect to the Loans entered into by Borrower and one or more Lenders
pursuant to the terms of this Agreement. Any Lender may, from time to time, in
its sole and absolute discretion, and as approved by Agent in its reasonable
discretion, enter into one or more Lender Interest Rate Agreements. Each Lender
Interest Rate Agreement shall constitute a Loan Document for purposes of this
Agreement.
32
"Letter of Credit" or "Letters of Credit" means Commercial Letters of
Credit and Standby Letters of Credit issued or to be issued by Issuing Lenders
for the account of Borrower pursuant to subsection 3.1.
"Letter of Credit Usage" means, as at any date of determination, the
sum of (i) the maximum aggregate amount which is or at any time thereafter may
become available for drawing under all Letters of Credit then outstanding plus
----
(ii) the aggregate amount of all drawings under Letters of Credit honored by
Issuing Lenders and not theretofore reimbursed out of the proceeds of Revolving
Loans pursuant to subsection 3.3B or otherwise reimbursed by Borrower.
"Lien" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
"Loan" or "Loans" means one or more of the Term Loans or Revolving
Loans or any combination thereof.
"Loan Documents" means this Agreement, the Notes, the Letters of
Credit (and any applications for, or reimbursement agreements or other documents
or certificates executed by Borrower in favor of an Issuing Lender relating to,
the Letters of Credit), the Guaranties, the Intercompany Notes, Intercompany
Note Guaranties, the Lender Interest Rate Agreements, the Collateral Documents,
the Intercompany Collateral Documents, the Security Trust Deed, the Beloit
Collateral Documents, Beloit Note and Beloit Note Guaranty.
"Loan Parties" means any of the Borrower or any Subsidiary of Borrower
executing a Loan Document but excluding any Immaterial Subsidiary and Industries
Insurance, Inc.
"Lock Box" means a lockbox maintained by any Loan Party pursuant to
arrangements satisfactory to Agent.
"Lock Box Account" means a Deposit Account under the exclusive
dominion and control of Agent that is maintained by any Loan Party with a Lock
Box Bank pursuant to a Lock Box Agreement.
"Lock Box Agreement" means a Lock Box Agreement executed and delivered
by a Lock Box Bank, Agent and the applicable Loan Party, substantially in the
form of Exhibit XIII annexed hereto, as such Lock Box Agreement may be amended,
------------
supplemented or otherwise modified from time to time, and "Lock Box Agreements"
means all such Lock Box Agreements, collectively.
"Lock Box Bank" means Agent or an Affiliate thereof, or in Agent's
sole and absolute discretion, another commercial bank satisfactory to Agent, at
which any Loan Party maintains a Lock Box Account.
33
"Margin Stock" has the meaning assigned to that term in Regulation U
of the Board of Governors of the Federal Reserve System as in effect from time
to time.
"Xxxx-to-Market Adjustment Amount" means the fluctuating credit
exposure of an Interest Rate Exchanger under a Lender Interest Rate Agreement
based upon increases or decreases in the interest rate or currency values, as
applicable. Each Interest Rate Exchanger shall provide to the Agent a
certificate containing the calculation of the Xxxx-to-Market Adjustment Amount
under the related Lender Interest Rate Agreement in reasonable detail not less
frequently than monthly.
"Material Adverse Effect" means (i) a material adverse effect upon the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of Borrower and its Subsidiaries, taken as a whole, or (ii) the
impairment in any material respect of the ability of any Loan Party to perform,
or of Agent or Lenders to enforce, the Obligations.
"Material Contract" means any contract or other arrangement to which
Borrower or any of its Subsidiaries is a party (other than the Loan Documents)
for which breach, nonperformance, cancellation or failure to renew could
reasonably be expected to have a Material Adverse Effect.
"Mortgage" means (i) a security instrument (whether designated as a
deed of trust or a mortgage or by any similar title) executed and delivered by
any Loan Party, substantially in such form as may be reasonably approved by
Agent, in each case with such changes thereto as may be recommended by Agent's
local counsel based on local laws or customary local mortgage or deed of trust
practices, or (ii) at Agent's option, in the case of an Additional Mortgaged
Property, an amendment to an existing Mortgage, in form reasonably satisfactory
to Agent, adding such Additional Mortgaged Property to the Real Property Assets
encumbered by such existing Mortgage, in either case as such security instrument
or amendment may be amended, supplemented or otherwise modified from time to
time. "Mortgages" means all such instruments, including the Closing Date
Mortgages and any Additional Mortgages, collectively.
"Mortgaged Properties" means, collectively, the Closing Date Mortgaged
Properties and the Additional Mortgaged Properties.
"Multiemployer Plan" means any Employee Benefit Plan that is a
"multiemployer plan" as defined in Section 3(37) of ERISA.
"Net Asset Sale Proceeds" means, with respect to any Asset Sale, Cash
payments (including any Cash received by way of deferred payment pursuant to, or
by monetization of, a note receivable or otherwise, but only as and when so
received) received from such Asset Sale, net of any bona fide direct costs
incurred by the Borrower or any of its Subsidiaries in connection with such
Asset Sale, including (i) income taxes reasonably estimated to be actually
payable by the Borrower or any of its Subsidiaries within two years of the date
of such Asset Sale as a result of any gain recognized in connection with such
Asset Sale and (ii) payment of the outstanding principal amount of, premium or
penalty, if any, and interest on any Indebtedness permitted hereby (other than
the Loans) by the Borrower or any of its Subsidiaries that is secured by a Lien
on the stock
34
or assets in question and that is required to be repaid under the terms thereof
or under applicable law as a result of such Asset Sale.
"Net Insurance/Condemnation Proceeds" means any Cash payments or
proceeds received by Borrower or any of its Subsidiaries (i) under any business
interruption or casualty insurance policy in respect of a covered loss
thereunder or (ii) as a result of the taking of any assets of Borrower or any of
its Subsidiaries by any Person pursuant to the power of eminent domain,
condemnation or otherwise, or pursuant to a sale of any such assets to a
purchaser with such power under threat of such a taking, in each case net of (i)
any actual and reasonable costs incurred by Borrower or any of its Subsidiaries
in connection with the adjustment or settlement of any claims of Borrower or
such Subsidiary in respect thereof, (ii) income taxes reasonably estimated to be
actually payable within two years of the date of such casualty, condemnation or
other taking of such assets, and (iii) payment of the outstanding principal
amount of, premium or penalty, if any, and interest on any Indebtedness
permitted hereby (other than the Loans) that is secured by a Lien on the asset
in question and that is required to be repaid under the terms thereof or under
applicable law as a result of such casualty, condemnation or other taking of
such assets.
"Net Securities Proceeds" means the cash proceeds (net of underwriting
discounts and commissions and other reasonable costs and expenses associated
therewith, including reasonable legal fees and expenses) from the (i) issuance
of Securities of or incurrence of Indebtedness by Borrower or any of its
Subsidiaries and (ii) capital contributions made by a holder of Securities of
Borrower.
"New Senior Debt" means the Indebtedness of Borrower evidenced by
those certain senior unsecured notes in the aggregate original principal amount
of approximately $121,800,000 issued in accordance with that certain Indenture,
dated on or about the Closing Date, by and among Borrower, as Issuer, the
Guarantors named therein and BNY Midwest Trust Company, as Trustee, relating to
its 10.75% Senior Notes due 2006, and the Confirmation Order to certain
prepetition creditors of certain Subsidiaries of Borrower in the Company
Bankruptcy Proceeding.
"Non-US Lender" has the meaning assigned to that term in subsection
2.7B(iii)(a).
"Notes" means one or more of the Tranche B Notes or Revolving Notes or
any combination thereof.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit I annexed hereto delivered by Borrower to Agent pursuant to subsection
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2.1B with respect to a proposed borrowing.
"Notice of Conversion/Continuation" means a notice substantially in
the form of Exhibit II annexed hereto delivered by Borrower to Agent pursuant to
----------
subsection 2.2D with respect to a proposed conversion or continuation of the
applicable basis for determining the interest rate with respect to the Loans
specified therein.
"Obligations" means all obligations of every nature of each Loan Party
from time to time owed to Agent, Lenders or any of them under the Loan
Documents, whether for
35
principal, interest (including interest accruing on or after the occurrence of
an Insolvency Event), reimbursement of amounts drawn under Letters of Credit,
fees, expenses, indemnification or otherwise.
"Officer" means the president, chief executive officer, a vice
president, chief financial officer, treasurer, assistant treasurer, general
partner (if an individual), managing member (if an individual) or other
individual appointed by the Governing Body or the Organizational Documents of a
corporation, partnership, trust or limited liability company to serve in a
similar capacity as the foregoing.
"Officer's Certificate" means, as applied to any Person that is a
corporation, partnership, trust or limited liability company, a certificate
executed on behalf of such Person by one or more Officers of such Person or one
or more Officers of a general partner or a managing member if such general
partner or managing member is a corporation, partnership, trust or limited
liability company.
"Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases that may be terminated by the lessee at
any time) of any property (whether real, personal or mixed) that is not a
Capital Lease other than any such lease under which that Person is the lessor.
"Orderly Liquidation Value" means a professional opinion of the
estimated most probable price that the subject personal property could typically
realize at a privately negotiated sale between a willing buyer and a willing
seller, properly advertised and professionally managed, by a seller obligated to
sell over an approximate six to nine month time period.
"Organizational Documents" means the documents (including Bylaws, if
applicable) pursuant to which a Person that is a corporation, partnership, trust
or limited liability company is organized.
"Other Bank Concentration Account" means an account under the
exclusive dominion and control of Agent that is maintained by any Loan Party
with a Bank (other than BTCo) that is satisfactory to Agent pursuant to a
Blocked Account Agreement into which the applicable Lock Box Banks are
instructed to transfer funds on deposit in the Lock Box Accounts pursuant to the
terms of the Lock Box Agreements.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor thereto).
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA.
"Permitted Discount Receivable Sales" means the sale, without
recourse, of any account receivable at a discount or for less than the face
value thereof (i) if such account receivable is supported by an irrevocable
commercial letter of credit in the face amount of the full face value of such
account, or (ii) if such account receivable reflects the purchase price
component of equipment sold in connection with the Life Cycle Management Program
of
36
Borrower or any of its Subsidiaries, to the extent approved by Agent, which
approval, if given, will determine any required default-related reserves.
"Permitted Discretion" means Agent's good faith judgment based upon
any material factor which it believes in good faith: (i) will or could
reasonably be expected to adversely affect in any material respect the value of
any Collateral, the enforceability or priority of Agent's Liens thereon or the
amount which Agent and Lenders would be likely to receive (after giving
consideration to delays in payment and costs of enforcement) in the liquidation
of such Collateral; (ii) suggests that any collateral report or financial
information delivered to Agent by any Person on behalf of any Loan Party is
incomplete, inaccurate or misleading in any material respect; (iii) materially
increases the likelihood of a bankruptcy, reorganization or other insolvency
proceeding involving Borrower or any of its Subsidiaries (other than Immaterial
Subsidiaries) or any of the Collateral; or (iv) creates or reasonably could be
expected to create a Potential Event of Default or Event of Default. In
exercising such judgment, Agent may consider such factors already included in or
tested by the definitions of Eligible Accounts Receivable, Eligible Unbilled
Accounts Receivable, Eligible Inventory, Eligible Machinery and Equipment,
Eligible Intellectual Property or Eligible Real Estate as well as any of the
following: (a) the financial and business climate of any Loan Party's industry
and general macroeconomic conditions, (b) changes in collection history and
dilution with respect to Loan Parties' Accounts, (c) changes in demand for, and
pricing of, Loan Parties' Inventory, (d) changes in any concentration of risk
with respect to such Accounts or Inventory, and (e) any other factors that
adversely change in any material respect the credit risk of lending to Borrower
on the security of such Accounts or Inventory. The burden of establishing lack
of good faith shall be on Borrower.
"Permitted Encumbrances" means the following types of Liens (excluding
any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or by ERISA, any such Lien relating to or imposed in connection
with any Environmental Claim, and any such Lien expressly prohibited by any
applicable terms of any of the Collateral Documents):
(i) Liens for taxes, assessments or governmental charges or
claims the payment of which is not, at the time, required by
subsection 6.3;
(ii) statutory Liens of landlords, statutory Liens and rights of
set-off of banks, statutory Liens of carriers, warehousemen,
mechanics, repairmen, workmen and materialmen, and other Liens imposed
by law, in each case incurred in the ordinary course of business (a)
for amounts not yet overdue or (b) for amounts that are overdue and
that (in the case of any such amounts overdue for a period in excess
of 30 days) are being contested in good faith by appropriate
proceedings, so long as (1) such reserves or other appropriate
provisions, if any, as shall be required by GAAP shall have been made
for any such contested amounts, and (2) in the case of a Lien with
respect to any portion of the Collateral, such contest proceedings
conclusively operate to stay the sale of any portion of the Collateral
on account of such Lien;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the
performance of tenders, statutory
37
obligations, surety and appeal bonds, bids, leases, government
contracts, trade contracts, performance and return-of-money bonds and
other similar obligations (exclusive of obligations for the payment of
borrowed money and exclusive of Liens securing progress payments,
adverse security deposits or similar advances made by customers), so
long as no foreclosure, sale or similar proceedings have been
commenced with respect to any portion of the Collateral on account
thereof;
(iv) any attachment or judgment Lien not constituting an Event
of Default under subsection 8.8;
(v) leases or subleases granted to third parties in accordance
with any applicable terms of the Collateral Documents and not
interfering in any material respect with the ordinary conduct of the
business of Borrower or any of its Subsidiaries or resulting in a
material diminution in the value of any Collateral as security for the
Obligations;
(vi) easements, rights-of-way, restrictions, encroachments, and
other minor defects or irregularities in title, in each case which do
not and will not interfere in any material respect with the ordinary
conduct of the business of Borrower or any of its Subsidiaries or
result in a material diminution in the value of any Collateral as
security for the Obligations;
(vii) any (a) interest or title of a lessor or sublessor under
any lease not prohibited by this Agreement, (b) restriction or
encumbrance that the interest or title of such lessor or sublessor may
be subject to, or (c) subordination of the interest of the lessee or
sublessee under such lease to any restriction or encumbrance referred
to in the preceding clause (b), so long as the holder of such
restriction or encumbrance agrees to recognize the rights of such
lessee or sublessee under such lease;
(viii) Liens arising from filing UCC financing statements
relating solely to leases not prohibited by this Agreement;
(ix) Liens in favor of customs and revenue authorities arising
as a matter of law to secure payment of customs duties in connection
with the importation of goods;
(x) any zoning or similar law or right reserved to or vested
in any governmental office or agency to control or regulate the use of
any real property;
(xi) Liens securing obligations (other than obligations
representing Indebtedness for borrowed money) under operating,
reciprocal easement or similar agreements entered into in the ordinary
course of business of Borrower and its Subsidiaries; and
(xii) licenses of patents, trademarks and other intellectual
property rights granted by Borrower or any of its Subsidiaries in the
ordinary course of
38
business and not interfering in any material respect with the ordinary
conduct of the business of Borrower or such Subsidiary.
"Permitted Transferees" means, with respect to any Person, (i) any
Affiliate of such Person, (ii) the heirs, executors, administrators,
testamentary trustees, legatees or beneficiaries of any such Person or (iii) a
trust, the beneficiaries of which, or a corporation or partnership, the
stockholders or general or limited partners of which, include only such Person
or his or her spouse or lineal descendants, in each case to whom such Person has
transferred the beneficial ownership of any Securities of Borrower.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments (whether federal,
state or local, domestic or foreign, and including political subdivisions
thereof) and agencies or other administrative or regulatory bodies thereof.
"Plan of Reorganization" means the Third Amended Joint Plan of
Reorganization dated May 3, 2001, of Borrower and Debtor Subsidiaries filed in
the Company Bankruptcy Proceeding, as amended and supplemented in any material
respect with the prior written approval of Agent.
"Pledged Collateral" means collectively, the "Pledged Collateral" as
defined in the Security Agreement, the Intercompany Collateral Documents, the
Beloit Collateral Documents and any Foreign Pledge Agreement.
"Potential Event of Default" means a condition or event that, after
notice or lapse of time or both, would constitute an Event of Default.
"Pricing Certificate" means an Officer's Certificate of Borrower
certifying the Consolidated Leverage Ratio as of the last day of any Fiscal
Quarter and setting forth the calculation of such Consolidated Leverage Ratio in
reasonable detail, which Officer's Certificate may be delivered to Agent at any
time on or after the date of delivery by Borrower of the Compliance Certificate
with respect to the period ending on the last day of such Fiscal Quarter
pursuant to subsection 6.1(iv).
"Primary Subsidiaries" means, individually and collectively, Joy
Technologies Inc., a Delaware corporation, doing business as Joy Mining
Machinery, and Harnischfeger Corporation, a Delaware corporation, doing business
as P&H Mining Equipment.
"Prime Rate" means the rate that BTCo announces from time to time as
its prime lending rate in the United States for Dollar denominated loans, as in
effect from time to time. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any customer.
BTCo or any other Lender may make commercial loans or other loans at rates of
interest at, above or below the Prime Rate.
"Proceedings" means any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration.
39
"Pro Rata Share" means (i) with respect to all payments, computations
and other matters relating to the Tranche B Term Loan Commitment or the Tranche
B Term Loan of any Lender, the percentage obtained by dividing (x) the Tranche B
Term Loan Exposure of that Lender by (y) the aggregate Tranche B Term Loan
Exposure of all Lenders, (ii) with respect to all payments, computations and
other matters relating to the Revolving Loan Commitment or the Revolving Loans
of any Lender or any Letters of Credit issued or participations therein
purchased by any Lender, the percentage obtained by dividing (x) the Revolving
Loan Exposure of that Lender by (y) the aggregate Revolving Loan Exposure of all
Lenders, and (iii) for all other purposes with respect to each Lender, the
percentage obtained by dividing (x) the sum of the Tranche B Term Loan Exposure
of that Lender plus the Revolving Loan Exposure of that Lender by (y) the sum of
the aggregate Tranche B Term Loan Exposure of all Lenders plus the aggregate
Revolving Loan Exposure of all Lenders, in any such case as the applicable
percentage may be adjusted by assignments permitted pursuant to subsection 10.1
or required pursuant to subsection 10.5. The initial Pro Rata Share of each
Lender for purposes of the preceding sentence is set forth opposite the name of
that Lender in Schedule 2.1 annexed hereto.
------------
"PTO" means the United States Patent and Trademark Office or any
similar office or registry in any applicable jurisdiction or any successor or
substitute office in which filings are necessary or, in the opinion of Agent,
desirable in order to create or perfect Liens on any Collateral consisting of
Intellectual Property.
"Raw Materials" means all raw materials or supplies to be used or
consumed in the production, manufacture, packing or shipping of Finished Goods
by a Person in the ordinary course of business prior to such use or consumption.
"Real Property Asset" means, at any time of determination, any
interest then owned by Borrower or any Guarantor in any real property.
"Recorded Leasehold Interest" means a Leasehold Property with respect
to which a Record Document (as hereinafter defined) has been recorded in all
places necessary or desirable, in Agent's reasonable judgment, to give
constructive notice of such Leasehold Property to third-party purchasers and
encumbrancers of the affected real property. For purposes of this definition,
the term "Record Document" means, with respect to any Leasehold Property, (a)
the lease evidencing such Leasehold Property or a memorandum thereof, executed
and acknowledged by the owner of the affected real property, as lessor, or (b)
if such Leasehold Property was acquired or subleased from the holder of a
Recorded Leasehold Interest, the applicable assignment or sublease document,
executed and acknowledged by such holder, in each case in form sufficient to
give such constructive notice upon recordation and otherwise in form reasonably
satisfactory to Agent.
"Register" has the meaning assigned to that term in subsection 2.1E.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Reimbursement Date" has the meaning assigned to that term in
subsection 3.3B.
40
"Related Agreements" means, individually and collectively, the
Approved Plan of Reorganization, the Confirmation Order, the Australian Joy
Subsidiary Note and related Intercompany Collateral Documents and Intercompany
Note Guaranty, the Australian P&H Subsidiary Note and related Intercompany
Collateral Documents and Intercompany Note Guaranty, the Canadian Subsidiary
Note and related Intercompany Collateral Documents and Intercompany Note
Guaranty, the UK Subsidiary Note and related Intercompany Collateral Documents
and Intercompany Note Guaranty, the Security Trust Deed, the Beloit Collateral
Documents, Beloit Note and Beloit Note Guaranty, all agreements, documents and
instruments governing or executed in connection with the New Senior Debt, and
all other agreements and instruments delivered pursuant to or in connection with
any of the foregoing, including any purchase agreement or registration rights
agreement.
"Release" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials into the environment (including,
without limitation, the abandonment or disposal of any barrels, containers or
other closed receptacles containing any Hazardous Materials), or into or out of
any Facility, including the movement of any Hazardous Materials through the air,
soil, surface water, groundwater or property.
"Request for Issuance of Letter of Credit" means a request
substantially in the form of Exhibit III annexed hereto delivered by Borrower to
-----------
Agent pursuant to subsection 3.1B(i) with respect to the proposed issuance of a
Letter of Credit.
"Required Reserves" means, individually and collectively, the
aggregate amount of reserves, if any, established by Agent in the exercise of
its Permitted Discretion, including without limitation any reserves established
by Agent with respect to credit facilities permitted pursuant to subsection
7.1(x) and with respect to potential exposures to preferential creditors as a
result of Agent's obtaining floating charges rather than fixed charges over
certain collateral, against any Eligible Accounts Receivable, Eligible Unbilled
Accounts Receivable, Eligible Inventory, Eligible Machinery and Equipment,
Eligible Real Estate and Eligible Intellectual Property.
"Requirement of Law" means (a) the certificates or articles of
incorporation, by-laws and other organizational or governing documents of a
Person, (b) any law, treaty, rule, regulation or determination of an arbitrator,
court or other governmental authority, or (c) any franchise, license, lease,
permit, certificate, authorization, qualification, easement, right of way, right
or approval binding on a Person or any of its property.
"Requisite Lenders" means Lenders having or holding more than 50% of
the sum of the aggregate Tranche B Term Loan Exposure of all Lenders plus the
aggregate Revolving Loan Exposure of all Lenders.
"Restricted Junior Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of Borrower now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock to the holders of that class, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of stock of Borrower now
or
41
hereafter outstanding, (iii) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock of Borrower now or hereafter outstanding, and (iv)
any payment or prepayment of principal of, premium, if any, or interest on, or
redemption, purchase, retirement, defeasance (including in-substance or legal
defeasance), sinking fund or similar payment with respect to, any Subordinated
Indebtedness or the New Senior Notes.
"Revolving Lender" means a Lender that has a Revolving Loan Commitment
and/or that has an outstanding Revolving Loan.
"Revolving Loan Commitment" means the commitment of a Lender to make
Revolving Loans to Borrower pursuant to subsection 2.1A, and "Revolving Loan
Commitments" means such commitments of all Lenders in the aggregate.
"Revolving Loan Commitment Termination Date" means the earlier to
occur of (i) October 31, 2005 and (ii) the date which is six months prior to the
maturity of New Senior Debt.
"Revolving Loan Exposure" means, with respect to any Lender as of any
date of determination (i) prior to the termination of the Revolving Loan
Commitments, that Lender's Revolving Loan Commitment and (ii) after the
termination of the Revolving Loan Commitments, the sum of (a) the aggregate
outstanding principal amount of the Revolving Loans of that Lender plus (b) in
----
the event that Lender is an Issuing Lender, the aggregate Letter of Credit Usage
in respect of all Letters of Credit issued by that Lender (in each case net of
any participations purchased by other Lenders in such Letters of Credit or in
any unreimbursed drawings thereunder) plus (c) the aggregate amount of all
----
participations purchased by that Lender in any outstanding Letters of Credit or
any unreimbursed drawings under any Letters of Credit.
"Revolving Loans" means the Loans made by Lenders to Borrower pursuant
to subsection 2.1.
"Revolving Notes" means (i) the promissory notes of Borrower issued
pursuant to subsection 2.1F on the Closing Date and (ii) any promissory notes
issued by Borrower pursuant to the last sentence of subsection 10.1B(i) in
connection with assignments of the Revolving Loan Commitments and Revolving
Loans of any Lenders, in each case substantially in the form of Exhibit IV-A
------------
annexed hereto, as they may be amended, supplemented or otherwise modified from
time to time.
"Securities" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any profit-
sharing agreement or arrangement, options, warrants, bonds, debentures, notes,
or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
42
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and any successor statute.
"Security Agreement" means the Security Agreement, substantially in
the form of Exhibit XIV annexed hereto, executed and delivered by Borrower and
-----------
Guarantors, in each case as such Security Agreement may thereafter be amended,
supplemented or otherwise modified from time to time.
"Security Trust Deed" has the meaning assigned to that term in
subsection 9.4B.
"Solvent" means, with respect to any Person, that as of the date of
determination both (A) (i) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (B) such Person is
"solvent" within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
"Standby Letter of Credit" means any standby letter of credit or
similar instrument issued for the purpose of supporting (i) Indebtedness of
Borrower or any of its Subsidiaries in respect of industrial revenue or
development bonds or financings, (ii) workers' compensation liabilities of
Borrower or any of its Subsidiaries, (iii) the obligations of third party
insurers of Borrower or any of its Subsidiaries arising by virtue of the laws of
any jurisdiction requiring third party insurers, (iv) obligations with respect
to Capital Leases or Operating Leases of Borrower or any of its Subsidiaries,
(v) bid bonds, (vi) contingent reimbursement obligations with respect to
progress payments, (vii) performance, warranty, payment, deposit or surety
obligations of Borrower or any of its Subsidiaries, in any case if required by
law or governmental rule or regulation or in accordance with custom and practice
in the industry, (viii) obligations of Borrower or any of its Subsidiaries in
respect of Hedge Agreements that are Lender Interest Rate Agreements, and (ix)
other obligations of Borrower and its Subsidiaries as may be approved by Agent
and Issuing Lender from time to time in writing and which is not otherwise
prohibited under this Agreement; provided that Standby Letters of Credit may not
--------
be issued for the purpose of supporting (a) trade payables (other than with
respect to an existing customer in China in accordance with past practices of
Borrower) or (b) any Indebtedness constituting "antecedent debt" (as that term
is used in Section 547 of the Bankruptcy Code) other than with respect to
letters of credit outstanding on the Closing Date.
"Static Reserve" shall mean the reserve for doubtful accounts,
returns, discounts, deductions, claims, credits, charges, value added taxes,
warranty claims and other allowances, and for goods that are not first quality
(except with respect to CEP), in effect from time to time, as established by
Agent in accordance with the terms hereof, against Eligible Accounts
43
Receivable, Eligible Unbilled Accounts Receivable and Eligible Inventory. Agent
shall establish the Static Reserve from time to time (and notify Borrower of the
same) based on inspections and audits conducted pursuant to subsection 6.5
hereof and other information received from Borrower pursuant to the terms
hereof.
"Subordinated Indebtedness" means any Indebtedness of Borrower (other
than Indebtedness to any of its Subsidiaries) that is subordinated in right of
payment to the Obligations pursuant to documentation containing maturities,
amortization schedules, covenants, defaults, remedies, subordination provisions
and other material terms in form and substance reasonably satisfactory to Agent
and Requisite Lenders.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, association, Joint Venture or other
business entity of which more than 50% of the total voting power of shares of
stock or other ownership interests entitled (without regard to the occurrence of
any contingency) to vote in the election of the members of the Governing Body is
at the time owned or controlled, directly or indirectly, by that Person or one
or more of the other Subsidiaries of that Person or a combination thereof.
"Supplemental Collateral Agent" has the meaning assigned to that term
in subsection 9.1B.
"Surplus Capacity" means, as of the date of determination, the amount,
if a positive number, equal to the Domestic Borrowing Base minus the Total
Utilization of Loan Commitments for the benefit of Domestic Loan Parties and
Beloit. As of any date of determination, the Surplus Capacity available for
application by Borrower for the benefit of any Foreign Loan Party shall be
reduced by the aggregate amount of Surplus Capacity previously allocated by
Borrower for the benefit of all other Foreign Loan Parties.
"Swap Reserve" means the fluctuating reserve established by Agent
against the applicable Borrowing Base in an amount equal to the aggregate Xxxx-
to-Market Adjustment Amounts under all applicable Lender Interest Rate
Agreements then outstanding. Agent shall adjust each Swap Reserve to reflect any
change in any Xxxx-to-Market Adjustment Amount under a Lender Interest Rate
Agreement as set forth in a certificate of the related Interest Rate Exchanger.
"Tax" or "Taxes" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or
assessed, including interest, penalties, additions to tax and any similar
liabilities with respect thereto; except that, in the case of a Lender, there
shall be excluded (1) taxes that are imposed on the overall net income or net
profits (including franchise taxes imposed in lieu thereof) (i) by the United
States, (ii) by any other Government Authority under the laws of which the
Lender is organized or has its principal office or maintains its applicable
lending office, or (iii) by any jurisdiction solely as a result of a present or
former connection between the Lender and such jurisdiction (other than any such
connection arising solely from the Lender having executed, delivered or
performed its obligations or received a payment under, or enforced any of the
Loan Documents), and (2) any
44
branch profits taxes imposed by the United States or any similar tax imposed by
any Governmental Authority in any other jurisdiction in which the Lender is
located.
"Term Loans" means, collectively, the Tranche B Term Loans.
"Term Loan Exposures" means the sum of the Tranche B Term Loan
Exposure of all Lenders.
"Title Company" means one or more title insurance companies reasonably
satisfactory to Agent.
"Tools" means items held by Borrower or a Loan Party and properly
classified as "Tools" in accordance with such Person's historical
classification.
"Total Loan Commitments" means the sum of (i) the Revolving Loan
Commitments plus (ii) the Term Loan Exposures.
"Total Utilization of Loan Commitments" means, as at any date of
determination, the sum of (i) the Term Loan Exposures plus (ii) the Total
Utilization of Revolving Loan Commitments.
"Total Utilization of Revolving Loan Commitments" means, as at any
date of determination, the sum of (i) the aggregate principal amount of all
outstanding Revolving Loans made to Borrower plus (ii) the Letter of Credit
----
Usage with respect to all Letters of Credit issued for the account of Borrower
and its Subsidiaries.
"Tranche B Term Loan Commitment" means the commitment of a Lender to
make a Tranche B Term Loan to Borrower pursuant to subsection 2.1A, and "Tranche
B Term Loan Commitments" means such commitments of all Lenders in the aggregate.
"Tranche B Term Loan Exposure" means, with respect to any Lender as at
any date of determination (i) prior to the funding of the Tranche B Term Loans,
that Lender's Tranche B Term Loan Commitment and (ii) after the funding of the
Tranche B Term Loans, the outstanding principal amount of the Tranche B Term
Loan of that Lender.
"Tranche B Term Loans" means the term loans made by Lenders to the
Borrower pursuant to subsection 2.1A.
"Tranche B Term Notes" means (i) the promissory notes of Borrower
issued pursuant to subsection 2.1F on the Closing Date and (ii) any promissory
notes issued by Borrower pursuant to the last sentence of subsection 10.1B(i) in
connection with assignments of the Tranche B Term Loan Commitments or Tranche B
Term Loans of any Lenders, in each case substantially in the form of Exhibit
-------
IV-B annexed hereto, as they may be amended, supplemented or otherwise modified
----
from time to time.
"Transaction Costs" means the fees, costs and expenses payable by any
Loan Party on or before the Closing Date in connection with the transactions
contemplated by the Loan Documents.
45
"UCC" means the Uniform Commercial Code and Personal Property Security
Act (or any similar or equivalent legislation) as in effect at any relevant time
in any applicable jurisdiction.
"UK Subsidiary Borrowing Limit" means the lesser of (i) $50,000,000 or
(ii) the amount of the Commitments.
"UK Loan Parties" means, individually and collectively, each
Subsidiary of Borrower which is organized under the laws of the United Kingdom
or any political subdivision thereof and which has either executed the UK
Subsidiary Note or an Intercompany Note Guaranty thereof, which UK Subsidiary
Note or Intercompany Note Guaranty is secured by a security interest in
substantially all of such Subsidiary's real, personal and mixed property. The
UK Loan Parties, as of the Closing Date, are so designated on Schedule 5.1.
------------
"UK Restructuring" means the restructuring transactions described in
the UK Restructuring Memorandum, if and to the extent approved in writing by
Agent in its discretion, provided that (i) the UK Restructuring shall not
involve the liquidation of any Subsidiary without the prior written consent of
Agent in each instance, and (ii) in connection with the UK Restructuring, each
of Harnischfeger Finance, LLC, Harnischfeger Finance (Barbados), Inc., and
Harnischfeger Holdings Ltd. shall, at Agent's election, promptly become UK Loan
Parties in accordance with subsection 6.9C and other terms of this Agreement.
"UK Restructuring Memorandum" means that certain memorandum regarding
the restructuring of Borrower's United Kingdom Subsidiaries prepared by Xxxxxx
Xxxxxxxx LLP and dated May 17, 2001.
"UK Subsidiary Borrowing Base" means, means, as at any date of
determination, an aggregate amount, in Dollar Equivalents if denominated in an
Approved Currency other than US Dollars, equal to:
(i) eighty-five percent (85%) of Eligible Accounts Receivable
of UK Loan Parties, plus
(ii) thirty-five percent (35%) of Eligible Unbilled Accounts
Receivable of UK Loan Parties, plus
(iii) fifty percent (50%) of Eligible Raw Materials of UK Loan
Parties, plus
(iv) fifty percent (50%) of Eligible Finished Goods of UK Loan
Parties, plus
(v) fifty percent (50%) of Eligible CEP of UK Loan Parties,
plus
(vi) thirty-five percent (35%) of Eligible Work-in-Process of
UK Loan Parties, plus
(vii) the lesser of (x) ninety percent (90%) of the Orderly
Liquidation Value of Eligible Machinery and Equipment of UK Loan
Parties and (y) an amount equal to $3,500,000 on or prior to July 30,
2002, $2,000,000 during the period from July 31, 2002 through October
30,2002 and zero thereafter, plus
46
(viii) the lesser of (x) sixty percent (60%) of the Appraised
Fair Market Value of Eligible Real Estate of UK Loan Parties and (y)
an amount equal to $4,500,000 on or prior to January 30, 2002,
$3,500,000 during the period from January 31, 2002 through April 29,
2002, $1,500,000 during the period from April 30, 2002 through July
30, 2002 and zero thereafter, plus
(ix) fifty percent (50%) of Eligible Tools of UK Loan Parties,
minus
(x) the Swap Reserve applicable to the UK Loan Parties then in
effect, minus
(xi) the aggregate amount of Dilution Reserves and Required
Reserves against Eligible Accounts Receivable, Eligible Unbilled
Accounts Receivable, Eligible Inventory, Eligible Machinery and
Equipment and Eligible Real Estate of UK Loan Parties;
provided that Agent, in the exercise of its Permitted Discretion, may
(a) increase or decrease such Required Reserves and (b) reduce the advance rates
provided in this definition, or restore such advance rates to any level equal to
or below the advance rates in effect as of the Closing Date.
"UK Subsidiary Note" means that certain Intercompany Note dated on or
about the date hereof, executed by UK Loan Parties in favor of Borrower, as such
promissory note may be amended from time to time thereafter to the extent
permitted under subsection 7.15.
"UK Utilization of Surplus Capacity" means, as of the date of
determination, the portion, if any, of the Surplus Capacity then in effect
allocated by Borrower to the UK Loan Parties.
"Work-in-Process" means goods to be sold by a Person in the normal
course of business, which are at the time of determination in the process of
being manufactured by such Person and which, as of the date of determination, is
shown on the perpetual inventory records or equivalent reporting in accordance
with such Person's historical classification as work-in-process. Work-in-
Process shall not include goods covered by Eligible Unbilled Accounts
Receivable.
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations
------------------------------------------------------------------
Under Agreement.
---------------
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by Borrower to Lenders pursuant to clauses (ii), (iii)
and (xii) of subsection 6.1 shall be prepared in accordance with GAAP as in
effect at the time of such preparation (and delivered together with the
reconciliation statements provided for in subsection 6.1(v)). Calculations in
connection with the definitions, covenants and other provisions of this
Agreement shall utilize GAAP as in effect on the date of determination, applied
in a manner consistent with that used in preparing the financial statements
referred to in subsection 5.3. If at any time any change in GAAP would affect
the
47
computation of any financial ratio or requirement set forth in any Loan
Document, and Borrower, Agent or Requisite Lenders shall so request, Agent,
Lenders and Borrower shall negotiate in good faith to amend such ratio or
requirement to preserve the original intent thereof in light of such change in
GAAP (subject to the approval of Requisite Lenders), provided that, until so
amended, such ratio or requirement shall continue to be computed in accordance
with GAAP prior to such change therein and Borrower shall provide to Agent and
Lenders reconciliation statements provided for in subsection 6.1(v).
1.3 Other Definitional Provisions.
-----------------------------
A. References to "Sections" and "subsections" shall be to Sections
and subsections, respectively, of this Agreement unless otherwise specifically
provided.
B. Any of the terms defined in subsection 1.1 may, unless the
context otherwise requires, be used in the singular or the plural, depending on
the reference.
C. An Event of Default shall "continue" or be "continuing" until
such Event of Default has been waived in accordance with subsection 10.6 hereof
or cured in accordance with the terms hereof.
D. The use in any of the Loan Documents of the word "include" or
"including," when following any general statement, term or matter, shall not be
construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters, whether or not nonlimiting language (such as "without limitation" or
"but not limited to" or words of similar import) is used with reference thereto,
but rather shall be deemed to refer to all other items or matters that fall
within the broadest possible scope of such general statement, term or matter.
E. All Exhibits, Schedules and the like annexed to this Agreement,
and all Recitals to this Agreement, are incorporated into this Agreement as if
set forth in full.
Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 Commitments; Making of Loans; the Register; Notes.
-------------------------------------------------
A. Commitments. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of Borrower
herein set forth, each Lender having a Tranche B Term Loan Commitment and a
Revolving Loan Commitment, as applicable, hereby severally agrees to make the
Loans described in this subsection 2.1A(i) and 2.1A(ii).
(i) Each Lender that has a Tranche B Term Loan Commitment
severally agrees, subject to the limitations set forth below with
respect to the maximum amount of Term Loans permitted to be
outstanding from time to time, to lend to Borrower on the Closing
Date an amount not exceeding its Pro Rata Share of the aggregate
amount of the Tranche B Term Loan Commitments to be used for the
purposes identified in subsection 2.5A. The amount of each Lender's
Tranche B Term Loan Commitment is set forth opposite its name on
Schedule 2.1 annexed hereto and the aggregate amount of the Tranche
------------
B Term Loan
48
Commitments is $100,000,000; provided that the Tranche B Term Loan
Commitments of Lenders shall be adjusted to give effect to any
assignments of the Tranche B Term Loan Commitments pursuant to
subsection 10.1B; and provided, further that the amount of the Term
Loan Exposures shall be reduced from time to time by the amount of any
reductions thereto made pursuant to subsection 2.4 or 6.4C. Each
Lender's Tranche B Term Loan Commitment shall expire immediately and
without further action on July 31, 2001 if the Tranche B Term Loans
are not made on or before that date. Borrower may make only one
borrowing under the Tranche B Term Loan Commitments. Amounts borrowed
under this subsection 2.1A(i) and subsequently repaid or prepaid may
not be reborrowed.
(ii) Each Lender severally agrees, subject to the limitations set
forth below with respect to the maximum amount of Revolving Loans
permitted to be outstanding from time to time, to lend to Borrower
from time to time during the period from the Closing Date to but
excluding the Revolving Loan Commitment Termination Date an aggregate
amount not exceeding its Pro Rata Share of the aggregate amount of the
Revolving Loan Commitments to be used for the purposes identified in
subsection 2.5A. The original amount of each Lender's Revolving Loan
Commitment is set forth opposite its name on Schedule 2.1 annexed
------------
hereto and the aggregate original amount of the Revolving Loan
Commitments is $250,000,000; provided that the Revolving Loan
Commitments of Lenders shall be adjusted to give effect to any
assignments of the Revolving Loan Commitments pursuant to subsection
10.1B; and provided, further that the amount of the Revolving Loan
Commitments shall be reduced from time to time by the amount of any
reductions thereto made pursuant to subsection 2.4 or 6.4C. Each
Lender's Revolving Loan Commitment shall expire on the Revolving Loan
Commitment Termination Date and all Revolving Loans and all other
amounts owed hereunder with respect to the Revolving Loans and the
Revolving Loan Commitments shall be paid in full no later than that
date; provided that each Lender's Revolving Loan Commitment shall
expire immediately and without further action on July 31, 2001 if the
initial Revolving Loans are not made on or before that date. Subject
to the provisions of subsection 2.4A, amounts borrowed under this
subsection 2.1A(ii) may be repaid and reborrowed to but excluding the
Revolving Loan Commitment Termination Date.
Anything contained in this Agreement to the contrary
notwithstanding, the Tranche B Term Loans, the Revolving Loans, the
Tranche B Term Loan Commitments and the Revolving Loan Commitments
shall be subject to the limitations that, after giving effect to any
requested Term Loan or Revolving Loan, no Borrowing Limitation shall
be exceeded.
B. Borrowing Mechanics. Term Loans or Revolving Loans made on any
Funding Date (other than Revolving Loans made pursuant to subsection 3.3B) shall
be in an aggregate minimum amount of $1,000,000 and multiples of $500,000 in
excess of that amount; provided that Term Loans or Revolving Loans made on any
--------
Funding Date as Eurodollar Rate Loans with a particular Interest Period shall be
in an aggregate minimum amount of $2,000,000
49
and multiples of $250,000 in excess of that amount. Whenever Borrower desires
that Lenders make Term Loans or Revolving Loans, Borrower shall deliver to Agent
a Notice of Borrowing no later than 12:00 noon (New York City time) at least
three Business Days in advance of the proposed Funding Date (in the case of a
Eurodollar Rate Loan) or on the proposed Funding Date (in the case of a Base
Rate Loan). Term Loans and Revolving Loans may be continued as or converted into
Base Rate Loans and Eurodollar Rate Loans in the manner provided in subsection
2.2D. In lieu of delivering a Notice of Borrowing, Borrower may give Agent
telephonic notice by the required time of any proposed borrowing under this
subsection 2.1B; provided that such notice shall be promptly confirmed in
writing by delivery of a Notice of Borrowing to Agent on or before the
applicable Funding Date.
Neither Agent nor any Lender shall incur any liability to Borrower in
acting upon any telephonic notice referred to above that Agent believes in good
faith to have been given by a duly authorized officer or other person authorized
to borrow on behalf of Borrower or for otherwise acting in good faith under this
subsection 2.1B or under subsection 2.2D, and upon funding of Loans by Daily
Funding Lender and/or Lenders, and upon conversion or continuation of the
applicable basis for determining the interest rate with respect to any Loans
pursuant to subsection 2.2D, in each case in accordance with this Agreement,
pursuant to any such telephonic notice Borrower shall have effected Loans or a
conversion or continuation, as the case may be, hereunder.
Borrower shall notify Agent prior to the funding of any Loans in the
event that any of the matters to which Borrower is required to certify in the
applicable Notice of Borrowing is no longer true and correct as of the
applicable Funding Date, and the acceptance by Borrower of the proceeds of any
Loans shall constitute a re-certification by Borrower, as of the applicable
Funding Date, as to the matters to which Borrower is required to certify in the
applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Borrowing for, or a Notice of Conversion/Continuation for conversion
to, or continuation of, a Eurodollar Rate Loan (or telephonic notice in lieu
thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and Borrower shall be bound to make a borrowing or to effect
a conversion or continuation in accordance therewith.
Notwithstanding the foregoing provisions of this subsection 2.1B, no
Eurodollar Rate Loan with an Interest Period of other than one month may be made
and no Base Rate Loan may be converted into a Eurodollar Rate Loan with an
Interest Period of other than one month until the earlier of the ninetieth day
after the Closing Date and the date specified by Agent to Borrower on which the
primary syndication of the Commitments and the Loans has been completed.
C. Disbursement of Funds.
(i) Subject to this subsection 2.1C and subsection 2.1D, all
Loans under this Agreement shall be made by Lenders simultaneously and
proportionately to their respective Pro Rata Shares, it being
understood that neither Agent nor any Lender shall be responsible for
any default by any other Lender in that other Lender's obligation to
make a Loan requested hereunder nor
50
shall the Commitment of any Lender to make the particular type of Loan
requested be increased or decreased as a result of a default by any
other Lender in that other Lender's obligation to make a Loan
requested hereunder.
(ii) Upon receipt by Agent of a Notice of Borrowing pursuant to
subsection 2.1B (or telephonic notice in lieu thereof) for Revolving
Loans that consist of Base Rate Loans and upon satisfaction or waiver
of the conditions precedent specified in subsection 4.1 (in the case
of Loans made on the Closing Date) and, subject to the provisions set
forth in the immediately succeeding paragraph, subsection 4.2 (in the
case of all Loans), Daily Funding Lender shall, without prior notice
to the other Lenders, make such Revolving Loans for its own account on
the applicable Funding Date (subject to settlement with the other
Lenders in accordance with subsection 2.1D) by making the proceeds of
such Revolving Loans available to Borrower on such Funding Date by
causing an amount of same day funds equal to the proceeds of such
Revolving Loans to be credited to the account of Borrower at the
Funding and Payment Office. Such Revolving Loans shall constitute
Revolving Loans by Daily Funding Lender for all purposes under the
Loan Documents, subject to settlement with the other Lenders pursuant
to subsection 2.1D. All interest accrued on any such Revolving Loans
from the date made by Daily Funding Lender to the Settlement Date with
respect thereto shall be for Daily Funding Lender's own account. Daily
Funding Lender shall make Revolving Loans for its own account pursuant
to this subsection 2.1C(ii) notwithstanding the fact that the
principal amount of such Revolving Loans, when added to the aggregate
principal amount of Daily Funding Lender's Revolving Loans then
outstanding, may exceed Daily Funding Lender's Revolving Loan
Commitment then in effect; provided that such Revolving Loans shall at
all times be Obligations owed to Daily Funding Lender under this
Agreement; and provided further that in no event shall the aggregate
principal amount of all Revolving Loans, including such Revolving
Loans, outstanding at any time exceed the aggregate Revolving Loan
Commitments then in effect minus the Letter of Credit Usage as of such
time.
Notwithstanding anything in this Agreement to the contrary, if
the conditions precedent specified in subsection 4.2 cannot be
fulfilled with respect to any proposed Revolving Loans that consist of
Base Rate Loans, Borrower shall, in its Notice of Borrowing or
otherwise, give immediate written notice thereof (specifying the
circumstances which prevent the conditions precedent from being
fulfilled) to Agent, with a copy to each Lender, and Daily Funding
Lender may (and each Lender hereby authorizes Daily Funding Lender
to), but is not obligated to, continue to make Revolving Loans that
are Base Rate Loans for 5 Business Days from the date Agent first
receives such notice, or until sooner instructed by Requisite Lenders
to cease making such Revolving Loans (the "Daily Funding Lender
Discretionary Period"); provided, however, that the aggregate
outstanding amount of such Revolving Loans made by Daily Funding
Lender shall not exceed $25,000,000 at any time. Once notice is given
by Borrower that circumstances exist which prevent the conditions
precedent to borrowing from being fulfilled, no additional notice with
respect to the same circumstances will be effective to commence a new
Daily Funding Lender Discretionary Period.
51
(iii) Promptly after receipt by Agent of a Notice of Borrowing
pursuant to subsection 2.1B (or telephonic notice in lieu thereof) for
any Loans (other than for Revolving Loans that consist of Base Rate
Loans), Agent shall notify each Lender of the proposed borrowing. Each
Lender shall make the amount of its Loan available to Agent, in same
day funds in Dollars, at the Funding and Payment Office, not later
than 12:00 Noon (New York City time) on the applicable Funding Date,
in each case in same day funds in Dollars, at the Funding and Payment
Office. Except as provided in subsection 3.3B with respect to
Revolving Loans used to reimburse any Issuing Lender for the amount of
a drawing under a Letter of Credit issued by it, upon satisfaction or
waiver of the conditions precedent specified in subsections 4.1 (in
the case of Loans made on the Closing Date) and, subject to the
provisions set forth in the immediately preceding paragraph, 4.2 (in
the case of all Loans), Agent shall make the proceeds of such Loans
available to Borrower on the applicable Funding Date by causing an
amount of same day funds in Dollars equal to the proceeds of all such
Loans received by Agent from Lenders to be credited to the account of
Borrower at the Funding and Payment Office.
Unless Agent shall have been notified by any Lender prior to the
Funding Date for any Loans pursuant to this subsection 2.1C that such
Lender does not intend to make available to Agent the amount of such
Lender's Loan requested on such Funding Date, Agent may assume that
such Lender has made such amount available to Agent on such Funding
Date and Agent may, in its sole discretion, but shall not be obligated
to, make available to Borrower a corresponding amount on such Funding
Date. If such corresponding amount is not in fact made available to
Agent by such Lender, Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest
thereon, for each day from such Funding Date until the date such
amount is paid to Agent, at the customary rate set by Agent for the
correction of errors among banks, but not to exceed the Federal Funds
Effective Rate, for three Business Days and thereafter at the Base
Rate. If such Lender does not pay such corresponding amount forthwith
upon Agent's demand therefor, Agent shall promptly notify Borrower and
Borrower shall immediately pay such corresponding amount to Agent
together with interest thereon, for each day from such Funding Date
until the date such amount is paid to Agent, at the rate payable under
this Agreement for Base Rate Loans. Nothing in this subsection 2.1C
shall be deemed to relieve any Lender from its obligation to fulfill
its Commitments hereunder or to prejudice any rights that Borrower may
have against any Lender as a result of any default by such Lender
hereunder.
D. Settlement Procedures.
(i) Daily Funding Lender will from time to time notify the
other Lenders, not later than 12:00 Noon (New York time) (a) on at
least one Business Day during each seven calendar-day period, (b) on
each date on which payment of interest on any Revolving Loans is
required to be made pursuant to subsection 2.2C, (c) on the Revolving
Loan Commitment Termination Date, and (d) at such other times as Daily
Funding Lender in its discretion may determine (each such
52
notice by Daily Funding Lender being a "Settlement Notice" and the
date of each Settlement Notice being a "Settlement Date") of the
aggregate principal amount of outstanding Revolving Loans made by
Daily Funding Lender and each other Lender as of the close of business
on the Business Day immediately preceding the applicable Settlement
Date.
(ii) If a Settlement Notice indicates that the aggregate
principal amount of outstanding Revolving Loans made by Daily Funding
Lender (including Revolving Loans made for its own account pursuant to
subsection 2.1C(ii)) is in excess of Daily Funding Lender's Pro Rata
Share of the aggregate principal amount of outstanding Revolving Loans
made by all Lenders (the amount of such excess being the "Excess
Funded Amount"), each other Lender will, not later than 4:00 P.M. (New
York time) on the applicable Settlement Date, pay to Daily Funding
Lender, by depositing same day funds in the account specified by Daily
Funding Lender at the Funding and Payment Office, an amount equal to
such Lender's Adjusted Pro Rata Share of the Excess Funded Amount,
upon which payment Daily Funding Lender shall be deemed to have sold,
and such Lender shall be deemed to have purchased, as of the
applicable Settlement Date, a portion of the outstanding Revolving
Loans made by Daily Funding Lender for its own account pursuant to
subsection 2.1C(ii) on or after the immediately preceding Settlement
Date equal to such Lender's Adjusted Pro Rata Share of the Excess
Funded Amount. The obligation of each Lender to purchase a portion of
any Revolving Loan made by Daily Funding Lender as provided in this
subsection 2.1D(ii) is subject to the condition that at the time such
Revolving Loan was made by Daily Funding Lender (a) the duly
authorized officer of Daily Funding Lender responsible for the
administration of Daily Funding Lender's credit relationship with
Borrower believed in good faith that either (X) no Event of Default
had occurred and was continuing or (Y) any Event of Default that had
occurred and was continuing had been waived by Requisite Lenders at
the time such Revolving Loan was made or (b) a Daily Funding Lender
Discretionary Period was in effect.
(iii) If a Settlement Notice indicates that the aggregate
principal amount of outstanding Revolving Loans made by Daily Funding
Lender is less than Daily Funding Lender's Pro Rata Share of the
aggregate principal amount of outstanding Revolving Loans made by all
Lenders (the amount of such difference being the "Excess Paydown
Amount"), Daily Funding Lender will, no later than 4:00 P.M. (New York
time) on the applicable Settlement Date, unconditionally pay to each
other Lender, by depositing same day funds in the account specified by
such Lender to Daily Funding Lender, an amount equal to such Lender's
Adjusted Pro Rata Share of the Excess Paydown Amount, upon which
payment such Lender shall be deemed to have sold, and Daily Funding
Lender shall be deemed to have purchased, as of the applicable
Settlement Date, a portion of the outstanding Revolving Loans of such
Lender equal to such Lender's Adjusted Pro Rata Share of the Excess
Paydown Amount.
53
(iv) Except as provided in subsection 2.1D(ii), the obligations
of Daily Funding Lender and each other Lender pursuant to subsections
2.1D(ii) and 2.1D(iii) shall be absolute and unconditional and shall
not be affected by any circumstance, including, without limitation,
(a) any set-off, counterclaim, recoupment, defense or other right
which Agent or any Lender may have against Agent, any other Lender,
any Loan Party or any other Person for any reason whatsoever; (b) the
occurrence or continuance of an Event of Default or a Potential Event
of Default; (c) any adverse change in the condition (financial or
otherwise) of Borrower or any of its Subsidiaries; (d) any breach of
this Agreement by Borrower, Agent or any Lender; or (e) any other
circumstance, happening, or event whatsoever, whether or not similar
to any of the foregoing. In the event that any Person (the "Payor")
obligated to make a payment to any other Person (the "Payee") pursuant
to this subsection 2.1D fails to make available to the Payee the
amount of such payment required to be made by the Payor, the Payee
shall be entitled to recover such amount on demand from the Payor
together with interest at the customary rate set by BTCo for the
correction of errors among Lenders for three Business Days and
thereafter at the sum of the Base Rate plus 1.50% per annum.
(v) In the event that all or any portion of any repayment of
principal of the Revolving Loans is thereafter recovered by or on
behalf of Borrower from Daily Funding Lender (including any such
recovery in a proceeding under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect) in an amount that is
proportionately greater (based on the respective Pro Rata Shares of
Lenders) than any such recovery from the other Lenders, the loss of
the amount so recovered shall be ratably shared among all Lenders in
the manner contemplated by subsection 10.5.
E. The Register.
Agent, acting for these purposes solely as an agent of Borrower (it
being acknowledged that Agent, in such capacity, and its officers, directors,
employees, agent and affiliates shall constitute Indemnitees under subsection
10.3), shall maintain (and make available for inspection by Borrower and Lenders
upon reasonable prior notice at reasonable times) at its address referred to in
subsection 10.8 a register for the recordation of, and shall record, the names
and addresses of Lenders and the Tranche B Term Loan Commitment, Tranche B Term
Loans, Revolving Loan Commitment and Revolving Loans of each Lender from time to
time (the "Register"). Borrower, Agent and Lenders shall deem and treat the
Persons listed as Lenders in the Register as the holders and owners of the
corresponding Commitments and Loans listed therein for all purposes hereof; all
amounts owed with respect to any Commitment or Loan shall be owed to the Lender
listed in the Register as the owner thereof; and any request, authority or
consent of any Person who, at the time of making such request or giving such
authority or consent, is listed in the Register as a Lender shall be conclusive
and binding on any subsequent holder, assignee or transferee of the
corresponding Commitments or Loans. Each Lender shall record on its internal
records the amount of its Loans and Commitments and each payment in respect
hereof, and any such recordation shall be conclusive and binding on Borrower,
absent manifest error, subject to the entries in the Register, which shall,
absent manifest error, govern in
54
the event of any inconsistency with any Lender's records. Failure to make any
recordation in the Register or in any Lender's records, or any error in such
recordation, shall not affect any Loans or Commitments or any Obligations in
respect of any Loans.
F. Notes. Borrower shall execute and deliver on or prior to the
Closing Date to Lenders (or to Agent for Lenders) Revolving Notes or a Revolving
Note substantially in the form of Exhibit IV-A annexed hereto and Tranche B Term
------------
Notes or a Tranche B Term Note substantially in the form of Exhibit IV-B annexed
------------
hereto, to evidence, as applicable, each Lender's Revolving Loans or the
Revolving Loans and each Lender's Tranche B Term Loans or the Tranche B Term
Loans, in the principal amount of, as applicable, that Lender's Revolving Loan
Commitment or the Revolving Loan Commitments and Tranche B Term Loan Commitments
or the Tranche B Term Loan Commitments, and with other appropriate insertions.
2.2 Interest on the Loans.
---------------------
A. Rate of Interest. Subject to the provisions of subsections 2.6
and 2.7, each Term Loan and each Revolving Loan shall bear interest on the
unpaid principal amount thereof from the date made through maturity (whether by
acceleration or otherwise) at a rate determined by reference to, in the case of
Loans, the Base Rate or the Adjusted Eurodollar Rate. The applicable basis for
determining the rate of interest with respect to any Term Loan or any Revolving
Loan shall be selected by Borrower initially at the time a Notice of Borrowing
is given with respect to such Loan pursuant to subsection 2.1B (subject to the
last sentence of subsection 2.1B), and the basis for determining the interest
rate with respect to any Term Loan or Revolving Loan may be changed from time to
time pursuant to subsection 2.2D (subject to the last sentence of subsection
2.1B). If on any day a Term Loan or Revolving Loan is outstanding with respect
to which notice has not been delivered to Agent in accordance with the terms of
this Agreement specifying the applicable basis for determining the rate of
interest, then for that day that Loan shall bear interest determined by
reference to the Base Rate.
(i) Subject to the provisions of subsections 2.2E, 2.2G and 2.7,
the Tranche B Term Loans shall bear interest through maturity as
follows:
(a) if a Base Rate Loan, then at the sum of the Base Rate
plus the Base Rate Margin set forth in the table below opposite
the Consolidated Leverage Ratio for the four Fiscal Quarter
period for which the applicable Pricing Certificate has been
delivered pursuant to subsection 6.1(iv); or
(b) if a Eurodollar Rate Loan, then at the sum of the
Adjusted Eurodollar Rate plus the Eurodollar Rate Margin set
forth in the table below opposite the Consolidated Leverage
Ratio for the four Fiscal Quarter period for which the
applicable Pricing Certificate has been delivered pursuant to
subsection 6.1(iv):
55
-----------------------------------------------------------------------------
Consolidated Leverage Ratio Eurodollar Rate Margin Base Rate Margin
-----------------------------------------------------------------------------
Greater than or equal to 3.0x 3.25% 2.25%
-----------------------------------------------------------------------------
Greater than or equal to 2.5x but 3.00% 2.00%
less than 3.0x
-----------------------------------------------------------------------------
Greater than or equal to 2.0x but 2.75% 1.75%
less than 2.5
-----------------------------------------------------------------------------
Less than 2.0x 2.25% 1.25%
-----------------------------------------------------------------------------
provided that, until the delivery of the Pricing Certificate for the first
--------
Fiscal Quarter ending six months after the Closing Date, the applicable margin
for Tranche B Term Loans that are Eurodollar Rate Loans shall be 3.25% per annum
and Tranche B Term Loans that are Base Rate Loans shall be 2.25% per annum.
(ii) Subject to the provisions of subsections 2.2E, 2.2G and
2.7, the Revolving Loans shall bear interest through maturity as
follows:
(a) if a Base Rate Loan, then at the sum of the Base
Rate plus the Base Rate Margin set forth in the table below
opposite the Consolidated Leverage Ratio for the four Fiscal
Quarter period for which the applicable Pricing Certificate has
been delivered pursuant to subsection 6.1(iv); or
(b) if a Eurodollar Rate Loan, then at the sum of the
Adjusted Eurodollar Rate plus the Eurodollar Rate Margin set
forth in the table below opposite the Consolidated Leverage Ratio
for the four Fiscal Quarter period for which the applicable
Pricing Certificate has been delivered pursuant to subsection
6.1(iv):
-----------------------------------------------------------------------------
Consolidated Leverage Ratio Eurodollar Rate Margin Base Rate Margin
-----------------------------------------------------------------------------
Greater than or equal to 3.0x 3.25% 2.25%
-----------------------------------------------------------------------------
Greater than or equal to 2.5x but 3.00% 2.00%
less than 3.0x
-----------------------------------------------------------------------------
Greater than or equal to 2.0x but 2.75% 1.75%
less than 2.5
-----------------------------------------------------------------------------
Less than 2.0x 2.25% 1.25%
-----------------------------------------------------------------------------
provided that, until the delivery of the Pricing Certificate for the first
--------
Fiscal Quarter ending six months after the Closing Date, the applicable margin
for Revolving Loans that are Eurodollar Rate Loans shall be 3.25% per annum
and Revolving Loans that are Base Rate Loans shall be 2.25% per annum.
56
(iii) Upon delivery of the Pricing Certificate by Borrower to
Agent pursuant to subsection 6.1(iv), the Base Rate Margin and the
Eurodollar Rate Margin shall automatically be adjusted in accordance
with such Pricing Certificate, such adjustment to become effective on
the next succeeding Business Day following the receipt by Agent of
such Pricing Certificate (subject to the provisions of the foregoing
clauses (i) and (ii)); provided that, if at any time (a) a Pricing
Certificate is not delivered at the time required pursuant to
subsection 6.1(iv), from the time such Pricing Certificate was
required to be delivered until delivery of such Pricing Certificate,
or (b) an Event of Default or a Potential Event of Default shall have
occurred and is continuing, such applicable margins shall be the
maximum percentage amount for the relevant Loan set forth above.
B. Interest Periods. In connection with each Eurodollar Rate Loan,
Borrower may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation delivered by Borrower, as the case may be, select an
interest period (each an "Interest Period") to be applicable to such Loan, which
Interest Period shall be, at Borrower's option, either a one, two, three, or,
subject to Lenders' approval, six month period; provided that:
(i) the initial Interest Period for any Eurodollar Rate Loan
shall commence on the Funding Date in respect of such Loan, in the
case of a Loan initially made as a Eurodollar Rate Loan, or on the
date specified in the applicable Notice of Conversion/Continuation, in
the case of a Loan converted to a Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest Periods
applicable to a Eurodollar Rate Loan continued as such pursuant to a
Notice of Conversion/Continuation, each successive Interest Period
shall commence on the day on which the next preceding Interest Period
expires;
(iii) if an Interest Period would otherwise expire on a day that
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, if any Interest Period would
otherwise expire on a day that is not a Business Day but is a day of
the month after which no further Business Day occurs in such month,
such Interest Period shall expire on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clause (v) of this subsection 2.2B, end on
the last Business Day of a calendar month;
(v) no Interest Period with respect to any portion of the
Tranche B Term Loans shall extend beyond April 30, 2005; and no
Interest Period with respect to any portion of the Revolving Loans
shall extend beyond the Revolving Loan Commitment Termination Date;
57
(vi) no Interest Period with respect to any type of Term Loans
shall extend beyond a date on which Borrower is required to make a
scheduled payment of principal of such type of Term Loans, unless the
sum of (a) the aggregate principal amount of such type of Term Loans
that are Base Rate Loans plus the aggregate principal amount of such
type of Term Loans that are Eurodollar Rate Loans with Interest
Periods expiring on or before such date equals or exceeds the
principal amount required to be paid on such type of Term Loans on
such date;
(vii) there shall be no more than ten (10) Interest Periods
outstanding at any time; and
(viii) in the event Borrower fails to specify an Interest Period
for any Eurodollar Rate Loan in the applicable Notice of Borrowing or
Notice of Conversion/Continuation delivered by Borrower, Borrower
shall be deemed to have selected an Interest Period of one month.
C. Interest Payments. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity); provided that in the event any Revolving Loans that are Base Rate
Loans are prepaid pursuant to subsection 2.4B(i), interest accrued on such
Revolving Loans through the date of such prepayment shall be payable on the next
succeeding Interest Payment Date applicable to Base Rate Loans (or, if earlier,
at final maturity).
D. Conversion or Continuation. Subject to the provisions of
subsection 2.6, Borrower shall have the option (i) to convert at any time all or
any part of its outstanding Term Loans or Revolving Loans equal to $1,000,000
and multiples of $500,000 in excess of that amount from Loans bearing interest
at a rate determined by reference to one basis to Loans bearing interest at a
rate determined by reference to an alternative basis, or (ii) upon the
expiration of any Interest Period applicable to a Eurodollar Rate Loan, to
continue all or any portion of such Loan equal to $2,000,000 and multiples of
$250,000 in excess of that amount as a Eurodollar Rate Loan; provided, however,
that a Eurodollar Rate Loan may only be converted into a Base Rate Loan on the
expiration date of an Interest Period applicable thereto unless Borrower pays on
such conversion date all amounts owing to Lenders under subsection 2.6D;
provided further that, until the earlier of the ninetieth day after the Closing
Date and the date specified by Agent to Borrower on which the primary
syndication of the Loans has been completed, no Base Rate Loan may be converted
into a Eurodollar Rate Loan with an Interest Period of other than one month and
no Eurodollar Rate Loan may be continued as a Eurodollar Rate Loan with an
Interest Period of other than one month.
Borrower shall deliver a Notice of Conversion/Continuation to Agent no
later than 10:00 A.M. (New York City time) on the proposed conversion date (in
the case of a conversion to a Base Rate Loan) and at least three Business Days
in advance of the proposed conversion/continuation date (in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan). In lieu of
delivering a Notice of Conversion/Continuation, Borrower may give Agent
telephonic notice by the required time of any proposed conversion/continuation
under this subsection 2.2D; provided that such notice shall be promptly
confirmed in writing by delivery of a Notice of Conversion/Continuation to Agent
on or before the proposed conversion/continuation
58
date. Upon receipt of written or telephonic notice of any proposed
conversion/continuation under this subsection 2.2D, Agent shall promptly
transmit such notice by telefacsimile or telephone to each Lender of the Loan
subject to the Notice of Conversion/Continuation.
E. Default Rate. Upon the occurrence and during the continuation of
any Event of Default, the outstanding principal amount of all Loans and, to the
extent permitted by applicable law, any interest payments thereon not paid when
due and any fees and other amounts then due and payable hereunder, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable Insolvency Laws) payable upon
demand at a rate that is 2% per annum in excess of the interest rate otherwise
payable under this Agreement with respect to the applicable Loans (or, in the
case of any such fees and other amounts, at a rate which is 2% per annum in
excess of the interest rate otherwise payable under this Agreement for Base Rate
Loans); provided that, in the case of Eurodollar Rate Loans, upon the expiration
of the Interest Period in effect at the time any such increase in interest rate
is effective such Eurodollar Rate Loans shall thereupon become Base Rate Loans
and shall thereafter bear interest payable upon demand at a rate which is 2% per
annum in excess of the interest rate otherwise payable under this Agreement for
Base Rate Loans. Payment or acceptance of the increased rates of interest
provided for in this subsection 2.2E is not a permitted alternative to timely
payment and shall not constitute a waiver of any Event of Default or otherwise
prejudice or limit any rights or remedies of Agent or any Lender.
F. Computation of Interest. Interest on the Loans shall be computed
on the basis of a 360-day year, in each case for the actual number of days
elapsed in the period during which it accrues. In computing interest on any
Loan, the date of the making of such Loan or the first day of an Interest Period
applicable to such Loan or, with respect to a Base Rate Loan being converted
from a Eurodollar Rate Loan, the date of conversion of such Eurodollar Rate Loan
to such Base Rate Loan, as the case may be, shall be included, and the date of
payment of such Loan or the expiration date of an Interest Period applicable to
such Loan or, with respect to a Base Rate Loan being converted to a Eurodollar
Rate Loan, the date of conversion of such Base Rate Loan to such Eurodollar Rate
Loan, as the case may be, shall be excluded; provided that if a Loan is repaid
on the same day on which it is made, one day's interest shall be paid on that
Loan.
G. Limitation on Interest. It is the intention of the parties
hereto to comply with all applicable usury laws, whether now existing or
hereafter enacted. Accordingly, notwithstanding any provision to the contrary in
this Agreement, the Notes, the other Loan Documents or any other document
evidencing, securing, guaranteeing or otherwise pertaining to the Obligations of
Borrower to the Lenders, in no contingency or event whatsoever, whether by
acceleration of the maturity of indebtedness of Borrower to the Lenders or
otherwise, shall the interest contracted for, charged or received by the Lenders
exceed the maximum amount permissible under applicable law. If from any
circumstances whatsoever fulfillment of any provisions of this Agreement, the
Notes, the other Loan Documents or of any other document evidencing, securing,
guaranteeing or otherwise pertaining to the Obligations of Borrower to the
Lenders, at the time performance of such provision shall be due, shall involve
transcending the limit of validity prescribed by law, then, ipso facto, the
obligation to be fulfilled shall be reduced to the limit of such validity, and
if from any such circumstances the Lenders shall ever receive anything of value
as interest or deemed interest by applicable law under this Agreement, the
Notes, the other Loan Documents or any other document evidencing, securing,
guaranteeing or
59
otherwise pertaining to the Obligations of Borrower to the Lenders or otherwise
an amount that would exceed the highest lawful amount (the "Maximum Rate"), such
amount that would be excessive interest shall be applied to the reduction of the
principal amount owing in connection with this Agreement or on account of any
other indebtedness of Borrower to the Lenders, and not to the payment of
interest, or if such excessive interest exceeds the unpaid balance of principal
owing in connection with this Agreement and such other indebtedness, such excess
shall be refunded to Borrower. In determining whether or not the interest paid
or payable with respect to indebtedness of Borrower to the Lenders, under any
specific contingency, exceeds the maximum nonusurious rate permitted under
applicable law, the Lenders may, at their option (a) characterize any non-
principal payment as an expense, fee or premium rather than as interest, (b)
exclude voluntary prepayments and the effects thereof, (c) amortize, prorate,
allocate and spread the total amount of interest throughout the full term of
such indebtedness so that the actual rate of interest on account of such
indebtedness does not exceed the maximum amount permitted by applicable law,
and/or (d) allocate interest between portions of the Obligations, to the end
that no such portion shall bear interest at a rate greater than that permitted
by law. Notwithstanding the foregoing, if for any period of time interest on any
Obligations is calculated at the Maximum Rate rather than the applicable rate
under this Agreement, and thereafter such applicable rate becomes less than the
Maximum Rate, the rate of interest payable on such Obligations shall remain at
the Maximum Rate until each Lender shall have received the amount of interest
which such Lender would have received during such period on such Obligations had
the rate of interest not been limited to the Maximum Rate during such period.
2.3 Fees.
----
A. Commitment Fees. Borrower agrees to pay to Agent, for distribution
to each Lender in proportion to that Lender's Pro Rata Share, commitment fees
for the period from and including the Closing Date to and excluding the
Revolving Loan Commitment Termination Date equal to the average of the daily
excess of the Revolving Loan Commitments over the Total Utilization of Revolving
Loan Commitments (the "Unused Portion") multiplied by a rate per annum equal to
the percentage (the "Commitment Fee Percentage") set forth in the table below
opposite the Unused Portion for the applicable Fiscal Quarter, such commitment
fees to be calculated on the basis of a 360-day year and the actual number of
days elapsed and to be payable quarterly in arrears on the first Business Day of
each Fiscal Quarter, commencing on the first such date to occur after the
Closing Date, and on the Revolving Loan Commitment Termination Date.
--------------------------------------------------------------------------
Applicable Unused Portion Commitment Fee Percentage
--------------------------------------------------------------------------
Less than or equal to 50% 0.50%
--------------------------------------------------------------------------
Greater than 50% but less than or equal to 65% 0.625%
--------------------------------------------------------------------------
Greater than 65% 0.75%
--------------------------------------------------------------------------
B. Other Fees. Borrower agrees to pay to Agent and Arranger such other
fees in the amounts and at the times separately agreed upon among Borrower,
Agent and Arranger.
60
2.4 Repayments, Scheduled Reductions of Revolving Loan Commitments;
---------------------------------------------------------------
Prepayments and Reductions in Revolving Loan Commitments; General
-----------------------------------------------------------------
Provisions Regarding Payments; Application of Proceeds of Collateral
--------------------------------------------------------------------
and Payments Under Guaranties.
-----------------------------
A. Scheduled Payments of Tranche B Term Loans. Borrower shall make
principal payments on the Tranche B Term Loans in installments and on the dates
and in the amounts set forth below:
--------------------------------------------------------------------------------
Date of Payment Amount of Scheduled Payment
--------------------------------------------------------------------------------
April 30, 2003 $25,000,000
--------------------------------------------------------------------------------
April 30, 2004 $25,000,000
--------------------------------------------------------------------------------
April 30, 2005 $50,000,000
--------------------------------------------------------------------------------
; provided that the scheduled installments of principal of the Tranche B Term
Loans set forth above shall be reduced in connection with any voluntary or
mandatory prepayments of the Tranche B Term Loans in accordance with subsection
2.4B(iv); and provided further that the Tranche B Term Loans and all other
amounts owed hereunder with respect to the Tranche B Term Loans shall be paid in
full no later than April 30, 2005, and the final installment payable by Borrower
in respect of the Tranche B Term Loans on such date shall be in an amount, if
such amount is different from that specified above, sufficient to repay all
amounts owing by Borrower under this Agreement with respect to the Tranche B
Term Loans.
B. Prepayments and Unscheduled Reductions in Revolving Loan
Commitments.
(i) Voluntary Prepayments. Borrower may, upon not less than one
---------------------
Business Day's prior written or telephonic notice, in the case of Base
Rate Loans, and three Business Days' prior written or telephonic
notice, in the case of Eurodollar Rate Loans, in each case given to
Agent by 12:00 Noon (New York City time) on the date required and, if
given by telephone, promptly confirmed in writing to Agent (which
original written or telephonic notice Agent will promptly transmit by
telefacsimile or telephone to each Lender for the Loans to be
prepaid), at any time and from time to time prepay any Tranche B Term
Loans or Revolving Loans on any Business Day in whole or in part in an
aggregate minimum amount of $500,000 and multiples of $250,000 in
excess of that amount; provided, however, that a Eurodollar Rate Loan
may only be prepaid on the expiration of the Interest Period
applicable thereto unless on such prepayment date Borrower shall pay
all amounts owing to Lenders pursuant to subsection 2.6D. Notice of
prepayment having been given as aforesaid, the principal amount of the
Loans specified in such notice shall become due and payable on the
prepayment date specified therein. Any such voluntary prepayment
shall be applied as specified in subsection 2.4B(iv).
61
(ii) Voluntary Reductions of Revolving Loan Commitments.
--------------------------------------------------
Borrower may, upon not less than three Business Days' prior written or
telephonic notice by Borrower confirmed in writing to Agent (which
original written or telephonic notice Agent will promptly transmit by
telefacsimile or telephone to each Lender), at any time and from time
to time terminate in whole or permanently reduce in part, without
premium or penalty, the Revolving Loan Commitments in an amount up to
the amount by which the Revolving Loan Commitments exceed the Total
Utilization of Revolving Loan Commitments at the time of such proposed
termination or reduction; provided that any such partial reduction of
the Revolving Loan Commitments shall be in an aggregate minimum amount
of $1,000,000 and multiples of $500,000 in excess of that amount;
provided further that no refinancing of the Revolving Loans and the
Revolving Loan Commitments shall be permitted without repayment in
full of all of the Term Loans and all of the other Obligations.
Borrower's notice to Agent shall designate the date (which shall be a
Business Day) of such termination or reduction and the amount of any
partial reduction, and such termination or reduction of the Revolving
Loan Commitments shall be effective on the date specified in
Borrower's notice and shall reduce the Revolving Loan Commitment of
each Lender proportionately to its Pro Rata Share as more specifically
provided in subsection 2.4B(iv).
(iii) Mandatory Prepayments and Mandatory Reductions of
-------------------------------------------------
Revolving Loan Commitments. The Loans shall be prepaid and/or the
--------------------------
Revolving Loan Commitments shall be permanently reduced in the amounts
and under the circumstances set forth below, all such prepayments
and/or reductions to be applied as set forth below or as more
specifically provided in subsection 2.4B(iv):
(a) Prepayments and Reductions From Net Asset Sale
----------------------------------------------
Proceeds. No later than the first Business Day following the date
--------
of receipt by Borrower or any of its Subsidiaries of any Net
Asset Sale Proceeds in respect of any Asset Sale, Borrower shall
either (I) prepay the Loans and/or the Revolving Loan Commitments
shall be permanently reduced in an aggregate amount equal to such
Net Asset Sale Proceeds or (II) so long as no Potential Event of
Default or Event of Default shall have occurred and be continuing
and to the extent that the Net Asset Sale Proceeds so reinvested
do not exceed $5,000,000 in any Fiscal Year and $15,000,000 in
the aggregate from the Closing Date through the date of
determination, deliver to Agent an Officer's Certificate setting
forth (1) that portion of such Net Asset Sale Proceeds that
Borrower or such Subsidiary intends to reinvest in equipment or
other productive assets of the general type used in the business
of Borrower and its Subsidiaries within 180 days of such date of
receipt and (2) the proposed use of such portion of the Net Asset
Sale Proceeds and such other information with respect to such
reinvestment as Agent may reasonably request, and Borrower shall,
or shall cause one or more of its Subsidiaries to, promptly and
diligently apply such portion to such reinvestment purposes;
provided, however, that pending reinvestment such portion of the
--------
Net Asset Sale
62
Proceeds shall be applied to prepay outstanding Revolving Loans
(without a reduction in Revolving Loan Commitments) to the full
extent thereof. In the case of an Asset Sale by a Foreign Loan
Party, Borrower shall cause such Foreign Loan Party to either (1)
prepay the Intercompany Loans made to such Foreign Loan Party or
(2) reinvest such Net Asset Sale Proceeds to the extent permitted
pursuant to the preceding clause (II). To the extent that the Net
Asset Sale Proceeds receivable by any Foreign Loan Party exceed
the aggregate outstanding amount of such Foreign Loan Party's
Intercompany Loans, such Foreign Loan Party shall apply such
excess proceeds to prepay the Intercompany Loans of the other
Foreign Loan Parties on a pro rata basis (in accordance with the
respective outstanding principal amount thereof) in an aggregate
amount equal to such excess proceeds; and to the extent that Net
Asset Sale Proceeds of such Asset Sale remain after the foregoing
applications, Borrower shall cause the excess of such Net Asset
Sale Proceeds to be applied to prepay the Loans of Borrower in an
aggregate amount equal to such excess proceeds and/or the
Revolving Loan Commitments shall be permanently reduced in an
amount equal to such excess proceeds. In addition, Borrower
shall, no later than 180 days after receipt of such Net Asset
Sale Proceeds that have not theretofore been applied to the
Obligations or that have not been so reinvested as provided
above, make an additional prepayment of the Loans (and/or the
Revolving Loan Commitments shall be permanently reduced) in the
full amount of all such Net Asset Sale Proceeds.
(b) Prepayments and Reductions from Net Insurance/
----------------------------------------------
Condemnation Proceeds. No later than the first Business Day
---------------------
following the date of receipt by Agent or by Borrower or any of
its Subsidiaries of any Net Insurance/Condemnation Proceeds that
are required to be applied to prepay the Loans and/or reduce the
Revolving Loan Commitments pursuant to the provisions of
subsection 6.4C, Borrower shall prepay the Loans and/or the
Revolving Loan Commitments shall be permanently reduced, and, in
the case of the receipt of such Net Insurance/ Condemnation
Proceeds by a Foreign Loan Party, such Foreign Loan Party shall
prepay the Intercompany Loans, in an aggregate amount equal to
the amount of such Net Insurance/Condemnation Proceeds in a
manner consistent with the prepayments made pursuant to the
foregoing subsection 2.4B(iii)(a).
(c) Prepayments and Reductions Due to Issuance of Equity
----------------------------------------------------
Securities. No later than the first Business Day following the
----------
date of receipt of Net Securities Proceeds from the issuance of
any equity
63
Securities of Borrower or any of its Subsidiaries (other than the
cash proceeds from the issuance of equity Securities by Borrower
to the management or employees of Borrower or its Subsidiaries
pursuant to stock option or stock incentive plans approved by
Borrower's Board of Directors or common equity Securities issued
as stock consideration paid in connection with acquisitions
permitted under subsection 7.3 provided that Agent has approved,
in its reasonable discretion, the terms of such equity
Securities) or from any capital contribution to Borrower by any
holder of equity Securities thereof after the Closing Date,
Borrower shall prepay the Loans and/or the Revolving Loan
Commitments shall be permanently reduced in an aggregate amount
equal to such Net Securities Proceeds.
(d) Prepayments and Reductions Due to Issuance of
---------------------------------------------
Indebtedness. No later than the first Business Day following the
------------
date of receipt of the Net Securities Proceeds from the issuance
of any Indebtedness of Borrower or any of its Subsidiaries after
the Closing Date, other than Indebtedness permitted pursuant to
subsection 7.1 on the Closing Date, Borrower shall prepay the
Loans and/or the Revolving Loan Commitments shall be permanently
reduced, and, in the case of the receipt of such Net Securities
Proceeds by a Foreign Loan Party, such Foreign Loan Party shall
prepay the Intercompany Loans, in an aggregate amount equal to
the amount of such Net Securities Proceeds in a manner consistent
with the prepayments made pursuant to the foregoing subsection
2.4B(iii)(a).
(e) Prepayments Due to Prepayments of Intercompany Loans.
----------------------------------------------------
No later than the first Business Day following Borrower's receipt
of any repayment of Intercompany Loans by any Foreign Loan Party
or Beloit, Borrower shall prepay the Loans but without any
permanent reduction in the Revolving Loan Commitments unless
otherwise required pursuant to the foregoing subsections
2.4B(iii)(a)-(d) in an aggregate amount equal to the amount of
such Intercompany Loan repayment.
(f) Prepayments and Reductions from Consolidated Excess
---------------------------------------------------
Cash Flow. In the event that there shall be Consolidated Excess
---------
Cash Flow for any Fiscal Year (commencing with Fiscal Year 2001
and continuing until the Term Loans and all other amounts owing
in connection therewith have been repaid in full), Borrower
shall, no later than 90 days after the end of such Fiscal Year,
prepay the Term Loans in an aggregate amount equal to seventy-
five percent (75%) of such Consolidated Excess Cash Flow,
provided that the aggregate amount of such payment required with
respect to Consolidated Excess Cash Flow for Fiscal Year 2001
shall not exceed $30,000,000.
(g) Calculations of Net Proceeds Amounts; Additional
------------------------------------------------
Prepayments and Reductions Based on Subsequent Calculations.
-----------------------------------------------------------
64
Concurrently with any prepayment of the Loans and/or reduction of
the Revolving Loan Commitments pursuant to subsections
2.4B(iii)(a)-(d) or subsection 2.4B(iii)(f), Borrower shall
deliver to Agent an Officer's Certificate demonstrating the
calculation of the amount of the applicable Net Asset Sale
Proceeds, Net Insurance/Condemnation Proceeds or Net Securities
Proceeds or the applicable Consolidated Excess Cash Flow, as the
case may be, that gave rise to such prepayment and/or reduction
and any related reduction in any Intercompany Loans and/or
Intercompany Notes and/or Foreign Borrowing Sublimits. In the
event that Borrower shall subsequently determine that the actual
amount was greater than the amount set forth in such Officer's
Certificate, Borrower shall promptly make an additional
prepayment of the Loans (and/or, if applicable, the Revolving
Loan Commitments shall be permanently reduced), and, to the
extent applicable, Foreign Loan Parties shall prepay the
Intercompany Loans and the Foreign Borrowing Sublimit applicable
to such Foreign Loan Party shall be permanently reduced, in an
amount equal to the amount of such excess, and Borrower shall
concurrently therewith deliver to Agent an Officer's Certificate
demonstrating the derivation of the additional amount resulting
in such excess.
(h) Prepayments Due to Reductions or Restrictions of Loan
-----------------------------------------------------
Commitments or Due to Insufficient Borrowing Base. On the date
-------------------------------------------------
of delivery of any applicable Borrowing Base Certificate pursuant
to subsection 6.1(xviii), Borrower shall from time to time prepay
the Loans (and shall cause any applicable Foreign Loan Party to
prepay such Foreign Loan Party's Intercompany Loans) to the
extent necessary so that no Borrowing Limitation is then
exceeded.
(i) Prepayments of Revolving Loans from Amounts Transferred
-------------------------------------------------------
to BTCo Account. If any amounts are transferred to the BTCo
---------------
Account on any Business Day pursuant to the terms of any Blocked
Account Agreement, then on such Business Day, if such amounts are
transferred to the BTCo Account prior to 12:00 Noon (New York
time) on such Business Day, or on the next succeeding Business
Day, if such amounts are transferred to the BTCo Account on or
after 12:00 Noon (New York time) on such Business Day, Borrower
shall prepay the Revolving Loans in an amount equal to the amount
transferred to the BTCo Account pursuant to the terms of the
applicable Blocked Account Agreement on such Business Day (to the
extent such amount relates to payments received in respect of
Accounts of Borrower or any of its Subsidiaries) until all
Revolving Loans shall have been paid in full.
(iv) Application of Prepayments.
--------------------------
(a) Application of Voluntary Prepayments. Any voluntary
------------------------------------
prepayments pursuant to subsection 2.4B(i) shall be applied as
specified by Borrower in the applicable notice of prepayment;
provided that in the
65
event Borrower fails to specify the Loans to which any prepayment
shall be applied, such prepayment shall be applied first to repay
-----
outstanding Revolving Loans to the full extent thereof (but
without any reduction in the Revolving Loan Commitments), and
second to repay outstanding Term Loans to the full extent
------
thereof. Any voluntary prepayments of the Term Loans pursuant to
subsection 2.4B(i) shall be applied to reduce the scheduled
installments of principal of the Tranche B Term Loans set forth
in subsection 2.4A on a pro rata basis (in accordance with the
respective outstanding principal amounts thereof) to each
remaining scheduled installment of principal of the Tranche B
Term Loans set forth in subsection 2.4A.
(b) Application of Mandatory Prepayments. Any amount
------------------------------------
required to be applied as a mandatory prepayment of the Loans
and/or a reduction of the Revolving Loan Commitments pursuant to
subsections 2.4B(iii)(a)-(d) shall be applied first, to prepay
-----
the Term Loans to the full extent thereof, second, to the extent
------
of any remaining portion of such amount, to prepay the Revolving
Loans to the full extent thereof and to permanently reduce the
Revolving Loan Commitments by the amount of such prepayment
applicable to the Revolving Loans, and third, to the extent of
-----
any remaining portion of such amount, to further permanently
reduce the Revolving Loan Commitments to the full extent thereof.
Any amount required to be applied as a mandatory prepayment of
the Term Loans pursuant to subsection 2.4B(iii)(f) shall be
applied only to prepay the Term Loans to the full extent thereof.
Any mandatory prepayments of the Tranche B Term Loans pursuant to
subsection 2.4B(iii), shall be applied to reduce the scheduled
installments of principal of the Tranche B Term Loans set forth
in subsection 2.4A on a pro rata basis (in accordance with the
respective outstanding principal amounts thereof) to each
remaining scheduled installment of principal of the Tranche B
Term Loans set forth in subsection 2.4A. Any amount required to
be applied as a mandatory prepayment of the Loans pursuant to
subsection 2.4B(iii)(h) shall be applied first to repay
-----
outstanding Revolving Loans to the full extent thereof (but
without any reduction in the Revolving Loan Commitments), and
second to repay outstanding Term Loans to the full extent
------
thereof.
(c) Application of Prepayments to Base Rate Loans and
-------------------------------------------------
Eurodollar Rate Loans; Option to Defer Certain Mandatory
--------------------------------------------------------
Prepayments of Eurodollar Rate Loans. Considering Loans being
------------------------------------
prepaid separately, any prepayment thereof shall be applied first
to Base Rate Loans to the full extent thereof before application
to Eurodollar Rate Loans, in each case in a manner which
minimizes the amount of any payments required to be made by
Borrower pursuant to subsection 2.6D; provided that, anything
--------
contained in this Agreement to the contrary notwithstanding, in
the event that (1) the application of any mandatory prepayment
pursuant to subsection 2.4B(iii) in accordance with the foregoing
provisions of this subsection 2.4B(iv) would result in the
prepayment of all or any portion of a Eurodollar Rate Loan prior
to the end of the Interest Period applicable thereto, and (2) no
Potential Event of Default or Event of Default shall have
occurred and be continuing, Borrower shall have the option to, by
giving written notice (or telephonic notice promptly confirmed in
writing)
66
to Agent of its election to do so on or before the first Business
Day prior to the date on which such prepayment would otherwise be
required to be made, if the remaining term of such Interest
Period is less than three months, defer the making of such
prepayment until the last day of such Interest Period or such
earlier date as Borrower may specify in such notice, and deposit
the amount of such prepayment otherwise required to be made
hereunder into the Collateral Account until the last day of such
Interest Period at which time Agent shall be authorized (without
any further action by or notice to or from Borrower) to apply
such amount to the prepayment of the Loans in accordance with
subsection 2.4B(iii).
C. General Provisions Regarding Payments.
(i) Manner and Time of Payment. All payments by Borrower of
--------------------------
principal, interest, fees and other Obligations hereunder and under
the Notes shall be made in Dollars in same day funds, without defense,
setoff or counterclaim, free of any restriction or condition, and
delivered to Agent not later than 12:00 Noon (New York City time) on
the date due at the Funding and Payment Office for the account of
Lenders. Funds received by Agent after that time on such due date
shall be deemed to have been paid by Borrower on the next succeeding
Business Day. In order to effect timely payment of any interest,
fees, commissions or other amounts due hereunder, Borrower hereby
authorizes Agent to request Daily Funding Lender to make Revolving
Loans for its own account (subject to settlement pursuant to
subsection 2.1D) in a principal amount equal to such interest, fees,
commissions or other amounts; provided that Agent shall not have the
right to request such Revolving Loans if, after giving effect to such
Revolving Loans, (a) the aggregate outstanding principal amount of
Revolving Loans would exceed the Revolving Loan Commitments then in
effect minus the Letter of Credit Usage, or (b) the Total Utilization
of Loan Commitments would exceed the Consolidated Borrowing Base then
in effect. Daily Funding Lender shall make the amount of such
Revolving Loans (which shall be made as Base Rate Loans) available to
Agent, in same day funds, at the Funding and Payment Office, not later
than 1:00 P.M. (New York time) on the date requested by Agent, and
Borrower and Lenders hereby authorize Agent, whether or not the
conditions specified in subsection 4.2 have been satisfied or waived,
to apply the proceeds of such Revolving Loans directly to the payment
of such unpaid interest, fees, commissions or other amounts. Borrower
hereby agrees that, upon the funding of any such Revolving Loans by
Daily Funding Lender in accordance with the provisions of this
subsection 2.4C(i), Borrower shall have effected Revolving Loans
hereunder, which Revolving Loans shall for all purposes of this
Agreement be deemed to have been made by Daily Funding Lender pursuant
to and in accordance with the provisions of subsection 2.1C(ii).
Agent shall deliver prompt notice to Borrower of the amount of
Revolving Loans made pursuant to this subsection 2.4C together with
copies of all invoices or other statements evidencing the fees,
commissions or other amounts due hereunder (other than interest) paid
with the proceeds of such Revolving Loans; provided that Agent shall
give notice to Borrower five days in advance of the making of any such
67
Revolving Loans for the payment of any amounts owed under subsection
10.2 together with copies of all invoices or other statements
evidencing such amounts. In addition, Borrower hereby authorizes
Agent to charge its accounts with Agent in order to cause timely
payment to be made to Agent of all principal, interest, fees and
expenses due hereunder (subject to sufficient funds being available in
its accounts for that purpose).
(ii) Application of Payments to Principal and Interest. Except
-------------------------------------------------
as provided in subsection 2.2C, all payments in respect of the
principal amount of any Loan shall include payment of accrued interest
on the principal amount being repaid or prepaid, and all such payments
(and, in any event, any payments in respect of any Loan on a date when
interest is due and payable with respect to such Loan) shall be
applied to the payment of interest before application to principal.
(iii) Apportionment of Payments. Aggregate principal and
-------------------------
interest payments in respect of Term Loans and Revolving Loans shall
be apportioned among all outstanding Loans to which such payments
relate, in each case proportionately to Lenders' respective Pro Rata
Shares of such Loans; provided that (i) payments of principal in
--------
respect of the Revolving Loans pursuant to subsection 2.4B(iii)(i)
shall be applied to reduce the outstanding Revolving Loans of Daily
Funding Lender (subject to settlement pursuant to subsection 2.1D)
prior to application to the outstanding Revolving Loans of any other
Lender and (ii) payments of interest in respect of Revolving Loans
which are Base Rate Loans shall be apportioned ratably among Lenders
in proportion to the average daily amount of such Base Rate Loans of
each Lender outstanding during the period in which such interest shall
have accrued. Agent shall promptly distribute to each Lender, at its
primary address set forth below its name on the appropriate signature
page hereof or at such other address as such Lender may request, its
Pro Rata Share of all such payments received by Agent in respect of
Loans and the commitment fees of such Lender when received by Agent
pursuant to subsection 2.3. Notwithstanding the foregoing provisions
of this subsection 2.4C(iii), if, pursuant to the provisions of
subsection 2.6C, any Notice of Conversion/Continuation is withdrawn as
to any Affected Lender or if any Affected Lender makes Base Rate Loans
in lieu of its Pro Rata Share of any Eurodollar Rate Loans, Agent
shall give effect thereto in apportioning payments received
thereafter.
(iv) Payments on Business Days. Whenever any payment to be
-------------------------
made hereunder shall be stated to be due on a day that is not a
Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the
computation of the payment of interest hereunder or of the commitment
fees hereunder, as the case may be.
(v) Notation of Payment. Each Lender agrees that before
-------------------
disposing of any Note held by it, or any part thereof (other than by
granting participations therein), that Lender will make a notation
thereon of all Loans evidenced by that
68
Note and all principal payments previously made thereon and of the
date to which interest thereon has been paid; provided that the
failure to make (or any error in the making of) a notation of any Loan
made under such Note shall not limit or otherwise affect the
obligations of Borrower hereunder or under such Note with respect to
any Loan or any payments of principal or interest on such Note.
D. Application of Proceeds of Collateral and Payments Under
Guaranties.
(i) Applications of Proceeds of Collateral. Except as provided
--------------------------------------
in subsection 2.4B(iii)(a) or (b), all proceeds received by Agent in
respect of any sale of, collection from, or other realization upon all
or any part of the Collateral under any Collateral Document may, in
the discretion of Agent, be held by Agent as Collateral for, and/or
(then or at any time thereafter) applied in full or in part by Agent
against, the applicable Secured Obligations (as defined in such
Collateral Document), in each case in the following order of priority:
(a) to the payment of all costs and expenses of such sale,
collection or other realization, all other expenses, liabilities
and advances made or incurred by Agent in connection therewith,
and all amounts for which Agent is entitled to compensation
(including the fees described in subsection 2.3), reimbursement
and indemnification under any Loan Document and all advances made
by Agent thereunder for the account of the applicable Loan Party,
and to the payment of all costs and expenses paid or incurred by
Agent in connection with the Loan Documents, all in accordance
with subsections 9.4, 10.2 and 10.3 and the other terms of this
Agreement and the Loan Documents;
(b) thereafter, to the extent of any excess such proceeds,
to the payment of all other Obligations for the ratable benefit
of the holders thereof (subject to the provisions of subsection
2.4C(ii) hereof); and
(c) thereafter, to the extent of any excess of such
proceeds, to the payment to, or upon the order of, such Loan
Party, or to whosoever may be lawfully entitled to receive the
same, or as a court of competent jurisdiction may direct.
(ii) Application of Payments Under Guaranties. All payments
----------------------------------------
received by Agent under any of the Guaranties shall be applied
promptly from time to time by Agent in the following order of
priority:
(a) To the payment of the costs and expenses of any
collection or other realization under such Guaranty, all other
expenses, liabilities and advances made or incurred by Agent in
connection therewith, and all amounts for which Agent is entitled
to compensation (including the fees described in subsection 2.3),
reimbursement and indemnification under any such Guaranty or Loan
Document and all advances made by Agent
69
thereunder for the account of the applicable Guarantor or Loan
Party, and to the payment of all costs and expenses paid or
incurred by Agent in connection with the Guaranties and the Loan
Documents, all in accordance with subsections 9.4, 10.2 and 10.3
and the other terms of this Agreement, the Guaranties and Loan
Documents;
(b) thereafter, to the extent of any excess such payments
to the payment of all other Guarantied Obligations (as defined in
such Guaranty) for the ratable benefit of the holders thereof;
and
(c) thereafter, to the extent of any excess such payments,
to the payment to the applicable Guarantor or to whosoever may be
lawfully entitled to receive the same or as a court of competent
jurisdiction may direct.
2.5 Use of Proceeds.
---------------
A. Loans.
(i) The proceeds of the Tranche B Term Loans and the Revolving
Loans made on the Closing Date shall be applied by Borrower as
follows:
(a) To make cash payments in the estimated aggregate amount
of approximately $51,000,000 on certain prepetition claims in the
Company Bankruptcy Proceeding and certain other costs and
expenses related to the confirmation of the Approved Plan of
Reorganization, as reasonably approved by Agent;
(b) To refinance all amounts outstanding, in the
approximate sum of $81,000,000, under the DIP Facility, and to
replace all outstanding letters of credit thereunder and under
other credit facilities in the approximate original face amount
of $80,000,000;
(c) To refinance amounts outstanding under the certain
short-term foreign notes in the approximate sum of $74,000,000,
including without limitation a credit facility provided by
National Westminster Bank Plc to the UK Loan Parties and eight
bank credit facilities provided to certain of the Australian Loan
Parties, through Intercompany Loans made to Foreign Loan Parties;
and
(d) To advance Intercompany Loans to Beloit in the
approximate amount of up to $15,000,000.
(ii) The proceeds of any other Revolving Loans shall be applied
by Borrower for working capital and other general corporate purposes,
which may include the making of the Intercompany Loans and other
intercompany loans by Borrower to certain Subsidiaries of Borrower in
accordance with subsection
70
7.1(iv) and other provisions of this Agreement, for the applicable
Subsidiary's own general corporate purposes.
(iii) The proceeds of any Loans made by Lenders to Borrower
based upon a Borrowing Base applicable to a Foreign Loan Party shall
be promptly advanced by Borrower as an Intercompany Loan to such
Foreign Loan Party and shall not be utilized by Borrower for any other
purpose whatsoever.
B. Margin Regulations. No portion of the proceeds of any borrowing
under this Agreement shall be used by Borrower or any of its Subsidiaries in any
manner that might cause the borrowing or the application of such proceeds to
violate Regulation U, Regulation T or Regulation X of the Board of Governors of
the Federal Reserve System or any other regulation of such Board or to violate
the Exchange Act, or any other comparable law or regulation of any other
Governmental Authority, in each case as in effect on the date or dates of such
borrowing and such use of proceeds.
2.6 Special Provisions Governing Eurodollar Rate Loans.
--------------------------------------------------
Notwithstanding any other provision of this Agreement to the contrary,
the following provisions shall govern with respect to Eurodollar Rate Loans as
to the matters covered:
A. Determination of Applicable Interest Rate. As soon as practicable
after 10:00 A.M. (New York City time) on each Interest Rate Determination Date,
Agent shall determine (which determination shall, absent manifest error, be
final, conclusive and binding upon all parties) the interest rate that shall
apply to the Eurodollar Rate Loans for which an interest rate is then being
determined for the applicable Interest Period and shall promptly give notice
thereof (in writing or by telephone confirmed in writing) to Borrower and each
Lender.
B. Inability to Determine Applicable Interest Rate. In the event
that Agent shall have determined in good faith (which determination shall be
final and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the interbank Eurodollar market adequate and fair means
do not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate, Agent shall on
such date give notice (by telefacsimile or by telephone confirmed in writing) to
Borrower and each Lender of such determination, whereupon (i) no Loans may be
made as, or converted to, Eurodollar Rate Loans until such time as Agent
notifies Borrower and such Lenders that the circumstances giving rise to such
notice no longer exist and (ii) any Notice of Borrowing or Notice of
Conversion/Continuation given by Borrower with respect to the Loans in respect
of which such determination was made shall be deemed to be for a Base Rate Loan.
C. Illegality or Impracticability of Eurodollar Rate Loans. In the
event that on any date any Lender shall have determined in good faith (which
determination shall be final and conclusive and binding upon all parties hereto
but shall be made only after consultation with Borrower and Agent) that the
making, maintaining or continuation of its Eurodollar Rate Loans (i) has become
unlawful as a result of compliance by such Lender in good faith with any
71
law, treaty, governmental rule, regulation, guideline or order (or would
conflict with any such treaty, governmental rule, regulation, guideline or order
not having the force of law even though the failure to comply therewith would
not be unlawful) or (ii) has become impracticable, or would cause such Lender
material hardship, as a result of contingencies occurring after the date of this
Agreement which materially and adversely affect the interbank Eurodollar market
or the position of such Lender in that market, then, and in any such event, such
Lender shall be an "Affected Lender" and it shall on that day give notice (by
telefacsimile or by telephone confirmed in writing) to Borrower and Agent of
such determination (which notice Agent shall promptly transmit to each other
Lender). Thereafter (a) the obligation of the Affected Lender to make Loans as,
or to convert Loans to, Eurodollar Rate Loans shall be suspended until such
notice shall be withdrawn by the Affected Lender, (b) to the extent such
determination by the Affected Lender relates to a Eurodollar Rate Loan then
being requested by Borrower pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, the Affected Lender shall make such Loan as (or convert
such Loan to, as the case may be) a Base Rate Loan (c) the Affected Lender's
obligation to maintain its outstanding Eurodollar Rate Loans (the "Affected
Loans"), shall be terminated at the earlier to occur of the expiration of the
Interest Period then in effect with respect to the Affected Loans or when
required by law, and (d) the Affected Loans shall automatically convert into
Base Rate Loans on the date of such termination. Notwithstanding the foregoing,
to the extent a determination by an Affected Lender as described above relates
to a Eurodollar Rate Loan then being requested by Borrower pursuant to a Notice
of Borrowing or a Notice of Conversion/Continuation, Borrower shall have the
option, subject to the provisions of subsection 2.6D, to rescind such Notice of
Borrowing or Notice of Conversion/Continuation as to all Lenders by Borrower
giving notice (by telefacsimile or by telephone confirmed in writing) to Agent
of such rescission on the date on which the Affected Lender gives notice of its
determination as described above (which notice of rescission Agent shall
promptly transmit to each other Lender). Except as provided in the immediately
preceding sentence, nothing in this subsection 2.6C shall affect the obligation
of any Lender other than an Affected Lender to make or maintain Loans as, or to
convert Loans to, Eurodollar Rate Loans in accordance with the terms of this
Agreement.
D. Compensation For Breakage or Non-Commencement of Interest
Periods. Borrower shall compensate each Lender, upon written request by that
Lender pursuant to subsection 2.8 (which request shall set forth the basis for
requesting such amounts), for all reasonable losses, expenses and liabilities
(including, without limitation, any interest paid by that Lender to lenders of
funds borrowed by it to make or carry its Eurodollar Rate Loans and any loss,
expense or liability sustained by that Lender in connection with the liquidation
or re-employment of such funds) which that Lender may sustain: (i) if for any
reason (other than a default by that Lender) a borrowing of any Eurodollar Rate
Loan does not occur on a date specified therefor in a Notice of Borrowing or a
telephonic request for borrowing, or a conversion to or continuation of any
Eurodollar Rate Loan does not occur on a date specified therefor in a Notice of
Conversion/Continuation or a telephonic request for conversion or continuation,
(ii) if any prepayment (including any prepayment or conversion occasioned by the
circumstances described in subsection 2.6C) or other principal payment or any
conversion of any of its Eurodollar Rate Loans occurs on a date prior to the
last day of an Interest Period applicable to that Loan, (iii) if any prepayment
of any of its Eurodollar Rate Loans is not made on any date specified in a
notice of prepayment given by Borrower, or (iv) as a consequence of any other
72
default by Borrower in the repayment of the Eurodollar Rate Loans when required
by the terms of this Agreement.
E. Booking of Eurodollar Rate Loans. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of any of its branch
offices or the office of an Affiliate of that Lender.
F. Assumptions Concerning Funding of Eurodollar Rate Loans.
Calculation of all amounts payable to a Lender under this subsection 2.6 and
under subsection 2.7A shall be made as though that Lender had funded each of its
Eurodollar Rate Loans through the purchase of a Eurodollar deposit bearing
interest at the rate obtained pursuant to clause (i) of the definition of
Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar
Rate Loan and having a maturity comparable to the relevant Interest Period,
whether or not its Eurodollar Rate Loans had been funded in such manner.
G. Eurodollar Rate Loans After Default. After the occurrence of and
during the continuation of a Potential Event of Default or an Event of Default,
(i) Borrower may not elect to have a Loan be made or maintained as, or converted
to, a Eurodollar Rate Loan after the expiration of any Interest Period then in
effect for that Loan and (ii) subject to the provisions of subsection 2.6D, any
Notice of Borrowing or Notice of Conversion/Continuation given by Borrower with
respect to a requested borrowing or conversion/continuation that has not yet
occurred shall be deemed for a Base Rate Loan or, if the conditions to making a
Loan set forth in subsection 4.2 cannot then be satisfied, to be rescinded by
Borrower.
2.7 Increased Costs; Taxes; Capital Adequacy.
----------------------------------------
A. Compensation for Increased Costs. Subject to the provisions of
subsection 2.7B (which shall be controlling with respect to the matters covered
thereby), in the event that any Lender (including any Issuing Lender) shall
determine in good faith (which determination shall, absent manifest error, be
final and conclusive and binding upon all parties hereto) that any law, treaty
or governmental rule, regulation or order, or any change therein or in the
interpretation, administration or application thereof (including the
introduction of any new law, treaty or governmental rule, regulation or order),
or any determination of a court or other Government Authority, in each case that
becomes effective after the date hereof, or compliance by such Lender with any
guideline, request or directive issued or made after the date hereof by any
central bank or other Government Authority (whether or not having the force of
law):
(i) subjects such Lender to any additional Tax with respect to
this Agreement or any of its obligations hereunder (including with
respect to issuing or maintaining any Letters of Credit or purchasing
or maintaining any participations therein or maintaining any
Commitment hereunder) or any payments to such Lender of principal,
interest, fees or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve, special
deposit, compulsory loan, insurance charge or similar requirement
against assets held by, or deposits or other liabilities in or for the
account of, or advances or loans by, or
73
other credit extended by, or any other acquisition of funds by, any
office of such Lender (other than any such reserve or other
requirements with respect to Eurodollar Rate Loans that are reflected
in the definition of Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with respect to
Taxes) on or affecting such Lender or its obligations hereunder or the
interbank Eurodollar market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining its Loans or Commitments or agreeing to
issue, issuing or maintaining any Letter of Credit or agreeing to purchase,
purchasing or maintaining any participation therein or to reduce any amount
received or receivable by such Lender with respect thereto; then, in any such
case, Borrower shall promptly pay to such Lender, upon receipt of the statement
referred to in subsection 2.8A, such additional amount or amounts (in the form
of an increased rate of, or a different method of calculating, interest or
otherwise as such Lender in its sole discretion shall determine) as may be
necessary to compensate such Lender for any such increased cost or reduction in
amounts received or receivable hereunder; provided that Borrower shall not be
obligated to pay such additional amounts to the extent such additional amounts
are incurred more than six (6) months prior to the giving of such statement.
B. Taxes.
(i) Payments to Be Free and Clear. All sums payable by
-----------------------------
Borrower under this Agreement and the other Loan Documents shall be
paid free and clear of, and without any deduction or withholding on
account of, any Tax imposed, levied, collected, withheld or assessed
by or within the United States of America or any political subdivision
in or of the United States of America or any other country or
jurisdiction from or to which a payment is made by or on behalf of
Borrower or by any federation or organization of which the United
States of America or any such jurisdiction is a member at the time of
payment.
(ii) Grossing-up of Payments. If Borrower or any other Person
-----------------------
is required by law to make any deduction or withholding on account of
any such Tax from any sum paid or payable by Borrower to Agent or any
Lender under any of the Loan Documents:
(a) Borrower shall notify Agent of any such requirement or
any change in any such requirement as soon as Borrower becomes
aware of it;
(b) Borrower shall pay any such Tax when such Tax is due,
such payment to be made (if the liability to pay is imposed on
Borrower) for its own account or (if that liability is imposed on
Agent or such Lender, as the case may be) on behalf of and in the
name of Agent or such Lender;
74
(c) the sum payable by Borrower in respect of which the
relevant deduction, withholding or payment is required shall be
increased to the extent necessary to ensure that, after the
making of that deduction, withholding or payment, Agent or such
Lender, as the case may be, receives on the due date a net sum
equal to what it would have received had no such deduction,
withholding or payment been required or made; and
(d) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within
30 days after the due date of payment of any Tax which it is
required by clause (b) above to pay, Borrower shall deliver to
Agent evidence satisfactory to the other affected parties of such
deduction, withholding or payment and of the remittance thereof
to the relevant taxing or other authority.
(iii) Evidence of Exemption from U.S. Withholding Tax.
-----------------------------------------------
(a) Each Lender that is organized under the laws of any
jurisdiction other than the United States or any state or other
political subdivision thereof (for purposes of this subsection
2.7B(iii), a "Non-US Lender") shall deliver to Agent and to
Borrower, on or prior to the Closing Date (in the case of each
Lender listed on the signature pages hereof) or on or prior to
the date of the Assignment Agreement pursuant to which it becomes
a Lender (in the case of each other Lender), and at such other
times as may be necessary in the determination of Borrower or
Agent (each in the reasonable exercise of its discretion), two
original copies of Internal Revenue Service Form W-8BEN or W-8ECI
(or any successor forms) properly completed and duly executed by
such Lender, or, in the case of a Non-US Lender claiming
exemption from United States federal withholding tax under
Section 871(h) or 881(c) of the Internal Revenue Code with
respect to payments of "portfolio interest," a form W-8BEN, and,
in the case of a Lender that has certified in writing to Agent
that it is not a "bank" (as defined in Section 881(c)(3)(A) of
the Internal Revenue Code), a certificate of such Lender
certifying that such Lender is not (i) a "bank" for purposes of
Section 881(c) of the Internal Revenue Code, (ii) a ten-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the
Internal Revenue Code) of Borrower or (iii) a controlled foreign
corporation related to Borrower (within the meaning of Section
864(d)(4) of the Internal Revenue Code) in each case together
with any other certificate or statement of exemption required
under the Internal Revenue Code or the regulations issued
thereunder to establish that such Lender is not subject to United
States withholding tax with respect to any payments to such
Lender of interest payable under any of the Loan Documents.
(b) Each Non-US Lender, to the extent it does not act or
ceases to act for its own account with respect to any portion of
any sums paid or
75
payable to such Lender under any of the Loan Documents (for
example, in the case of a typical participation by such Lender),
shall deliver to Agent and to Borrower, on or prior to the
Closing Date (in the case of each Lender listed on the signatures
pages hereof), on or prior to the date of the Assignment
Agreement pursuant to which it becomes a Lender (in the case of
each other Lender), or on such later date when such Lender ceases
to act for its own account with respect to any portion of any
such sums paid or payable, and at such other times as may be
necessary in the determination of Borrower or Agent (each in the
reasonable exercise of its discretion), (1) two original copies
of the forms or statements required to be provided by such Lender
under subsection 2.7B(iii)(a), properly completed and duly
executed by such Lender, to establish the portion of any such
sums paid or payable with respect to which such Lender acts for
its own account that is not subject to United States withholding
tax, and (2) two original copies of Internal Revenue Service Form
W-8IMY (or any successor forms) properly completed and duly
executed by such Lender, together with any information, if any,
such Lender chooses to transmit with such form, and any other
certificate or statement of exemption required under the Internal
Revenue Code or the regulations issued thereunder, to establish
that such Lender is not acting for its own account with respect
to a portion of any such sums payable to such Lender.
(c) Each Non-US Lender hereby agrees, from time to time
after the initial delivery by such Lender of such forms, whenever
a lapse in time or change in circumstances renders such forms,
certificates or other evidence so delivered obsolete or
inaccurate in any material respect, that such Lender shall
promptly (1) deliver to Agent and to Borrower two original copies
of renewals, amendments or additional or successor forms,
properly completed and duly executed by such Lender, together
with any other certificate or statement of exemption required in
order to confirm or establish that such Lender is not subject to
United States withholding tax with respect to payments to such
Lender under the Loan Documents and, if applicable, that such
Lender does not act for its own account with respect to any
portion of such payment, or (2) notify Agent and Borrower of its
inability to deliver any such forms, certificates or other
evidence.
Borrower shall not be required to pay any additional amount to any
Non-US Lender under clause (c) of subsection 2.7B(ii) if such Lender shall have
failed to satisfy the requirements of clause (a), (b) or (c)(1) of this
subsection 2.7B(iii) and such Lender was in fact properly entitled to deliver
forms, certificates or other evidence establishing that such Lender was not
subject to withholding as described in subsection 2.7B(iii)(a).
C. Capital Adequacy Adjustment. If any Lender shall have determined
in good faith that the adoption, effectiveness, phase-in or applicability after
the date hereof of any law, rule or regulation (or any provision thereof)
regarding capital adequacy, or, after the date hereof, any change therein or in
the interpretation or administration thereof by any Government
76
Authority charged with the interpretation or administration thereof, or
compliance by any Lender with any guideline, request or directive regarding
capital adequacy (whether or not having the force of law) of any such Government
Authority issued, adopted or changed after the date hereof, has or would have
the effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of, or with reference to,
such Lender's Loans or Commitments or Letters of Credit or participations
therein or other obligations hereunder with respect to the Loans or the Letters
of Credit to a level below that which such Lender or such controlling
corporation could have achieved but for such adoption, effectiveness, phase-in,
applicability, change or compliance (taking into consideration the policies of
such Lender or such controlling corporation with regard to capital adequacy),
then from time to time, within five Business Days after receipt by Borrower from
such Lender of the statement referred to in subsection 2.8A, Borrower shall pay
to such Lender such additional amount or amounts as will compensate such Lender
or such controlling corporation on an after-tax basis for such reduction;
provided that Borrower shall not be obligated to pay such additional amounts to
the extent such additional amounts are incurred more than six (6) months prior
to the giving of such statement.
2.8 Statement of Lenders; Obligation of Lenders and Issuing Lenders to
------------------------------------------------------------------
Mitigate.
--------
A. Statements. Each Lender claiming compensation or reimbursement
pursuant to subsection 2.6D, 2.7 or 2.8B shall deliver to Borrower (with a copy
to Agent) a written statement, setting forth in reasonable detail the basis of
the calculation of such compensation or reimbursement, which statement shall be
conclusive and binding upon all parties hereto absent manifest error.
B. Mitigation. Each Lender and Issuing Lender agrees that, as
promptly as practicable after the officer of such Lender or Issuing Lender
responsible for administering the Loans or Letters of Credit of such Lender or
Issuing Lender, as the case may be, becomes aware of the occurrence of an event
or the existence of a condition that would cause such Lender to become an
Affected Lender or that would entitle such Lender or Issuing Lender to receive
payments under subsection 2.7, use reasonable effort to make, issue, fund or
maintain the Commitments of such Lender or the Affected Loans or Letters of
Credit of such Lender or Issuing Lender through another lending or letter of
credit office of such Lender or Issuing Lender, if (i) as a result thereof the
circumstances which would cause such Lender to be an Affected Lender would cease
to exist or the additional amounts which would otherwise be required to be paid
to such Lender or Issuing Lender pursuant to subsection 2.7 would be materially
reduced and (ii) as determined by such Lender or Issuing Lender in its sole
discretion, such action would not otherwise be disadvantageous to such Lender or
Issuing Lender; provided that such Lender or Issuing Lender will not be
obligated to utilize such other lending or letter of credit office pursuant to
this subsection 2.8B unless Borrower agrees to pay all incremental expenses
incurred by such Lender or Issuing Lender as a result of utilizing such other
lending or letter of credit office as described above.
77
2.9 Replacement of a Lender.
-----------------------
If any Lender (a "Non-Funding Lender") fails to fund any Loan required
to be funded by it in accordance with the terms hereof, or if Borrower receives
a statement of amounts due pursuant to subsection 2.8A from a Lender or a Lender
becomes an Affected Lender (any such Lender, including a Non-Funding Lender, a
"Subject Lender"), so long as (i) no Potential Event of Default or Event of
Default shall have occurred and be continuing and Borrower has obtained a
commitment from another Lender or an Eligible Assignee to purchase at par the
Subject Lender's Loans and assume the Subject Lender's Commitments and all other
obligations of the Subject Lender hereunder, (ii) such Lender is not an Issuing
Lender with respect to any Letters of Credit outstanding (unless all such
Letters of Credit are terminated or arrangements acceptable to such Issuing
Lender (such as a "back-to-back" letter of credit) are made) and (iii), if
applicable, the Subject Lender is unwilling to withdraw the notice delivered to
Borrower pursuant to subsection 2.8 upon 10 days prior written notice to the
Subject Lender and Agent, Borrower may require the Subject Lender to assign all
of its Loans and Commitments to such other Lender, Lenders, Eligible Assignee or
Eligible Assignees pursuant to the provisions of subsection 10.1B; provided
that, prior to or concurrently with such replacement, (1) the Subject Lender
shall have received payment in full of all principal, interest, fees and other
amounts, including all amounts under subsections 2.6D, 2.7 and/or 2.8B (if
applicable) through such date of replacement and a release from its obligations
under the Loan Documents, (2) the processing fee required to be paid by
subsection 10.1B(i) shall have been paid to Agent, and (3) all of the
requirements for such assignment contained in subsection 10.1B, including,
without limitation, the consent of Agent (if required, provided that the consent
of Agent, such consent not to be unreasonably withheld, shall be required in all
instances of replacement of a Non-Funding Lender) and the receipt by Agent of an
executed Assignment Agreement and other supporting documents, have been
fulfilled.
2.10 Collection, Deposit and Transfer of Payments in Respect of Accounts of
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Borrower and Domestic Subsidiaries; Other Matters Concerning Accounts.
---------------------------------------------------------------------
Borrower shall, and shall cause each of the Primary Subsidiaries (and
such other Subsidiaries, including without limitation Foreign Subsidiaries, as
may from time to time be required by Agent in the exercise of its reasonable
discretion to be so included) to, maintain in effect at all times a system of
accounts and procedures reasonably satisfactory to Agent for the collection and
deposit of payments in respect of such Person's Accounts (with respect to
account debtors other than Subsidiaries of Borrower) and the transfer of amounts
so deposited to the applicable Concentration Account and BTCo Account. Without
limiting the generality of the foregoing:
A. Maintenance of Lock Boxes, Lock Box Accounts and Concentration
Accounts.
(i) Except as permitted under subsection 2.10A(ii), Borrower
shall, and shall cause each of the Primary Subsidiaries (and such
other Subsidiaries, including without limitation Foreign Subsidiaries,
as may from time to time be required by Agent in the exercise of its
reasonable discretion to be so included) to, at all times maintain any
Lock Boxes, Lock Box Accounts and Concentration
78
Accounts established pursuant to the terms of this Agreement, the Lock
Box Agreements and the Blocked Account Agreements, if any.
(ii) Borrower shall not, and shall not permit any of the Primary
Subsidiaries or other Subsidiaries so designated by Agent pursuant to
subsection 2.10A(i) hereof (unless otherwise agreed to by Agent in its
reasonable discretion) to, close any Lock Box Account or Concentration
Account or open a new Lock Box Account or Concentration Account unless
it shall have (a) notified Agent in writing at least 30 days (or such
lesser number of days as may be agreed to by Agent) prior to the
proposed closing or opening, (b) in the case of a new Lock Box
Account, entered into a Lock Box Agreement with the applicable Lock
Box Bank and (c) in the case of a new Other Bank Concentration
Account, entered into a Blocked Account Agreement with the applicable
Concentration Bank.
B. Collection and Deposit of Payments in Respect of Accounts.
(i) Borrower shall, and shall cause each of its Domestic
Subsidiaries (and such Foreign Subsidiaries as may from time to time
be required by Agent in the exercise of its reasonable discretion to
be so included) to, deliver such notices to account debtors (other
than any account debtor that is a Subsidiary of Borrower) and take all
such other actions as may reasonably be necessary to cause all
payments in respect of such Person's Accounts to be made directly to a
Lock Box or to a Concentration Account (via wire transfer).
(ii) Borrower shall, or shall cause each of its Domestic
Subsidiaries (and such Foreign Subsidiaries as may from time to time
be required by Agent in the exercise of its reasonable discretion to
be so included) to, direct its authorized representative, at least
once on each Business Day, to retrieve all checks and other
instruments delivered to a Lock Box and, as promptly as possible on
the same Business Day so retrieved, to endorse for payment and deposit
each such check or other instrument in the Lock Box Account related to
such Lock Box. Notwithstanding the foregoing, from and after such
time as Agent shall have notified Borrower of its election to exercise
its rights under this subsection 2.10B(ii), Borrower shall not, and
shall not permit any of its Domestic Subsidiaries (and such Foreign
Subsidiaries as may from time to time be required by Agent in the
exercise of its reasonable discretion to be so included) to, retrieve
any items from any Lock Box unless accompanied by a representative of
Agent, and Borrower hereby appoints Agent or any of its designees as
Borrower's attorney-in-fact with powers, upon notification by Agent as
aforesaid, to (a) access all Lock Boxes and (b) endorse for payment
any checks or other instruments representing payment in respect of any
Accounts of such Persons that are delivered to any Lock Box. All acts
of said attorneys or designees are hereby ratified and approved, and
said attorneys or designees shall not be liable for any acts of
omission or commission (other than acts or omissions constituting
gross negligence or willful misconduct as determined in a final order
by a court of competent jurisdiction), nor for any error of judgment
or mistake of fact or law. The power of attorney set forth in this
subsection 2.10B(ii) is irrevocable until all
79
Obligations shall have been paid in full and the Commitments shall
have terminated.
(iii) In the event that Borrower or any of its Domestic
Subsidiaries (and such Foreign Subsidiaries as may from time to time
be required by Agent in the exercise of its reasonable discretion to
be so included) receives any check, cash, note or other instrument
representing payment of an Account from an account debtor other than a
Subsidiary of Borrower (other than any item delivered to a Lock Box),
Borrower shall, or shall cause such Domestic Subsidiary to, hold such
item in trust for Agent and shall, as soon as practicable (and in any
event within one Business Day) after receipt thereof, cause such item
to be deposited into a Lock Box Account with any necessary
endorsements.
(iv) Borrower hereby agrees, from and after such time, if any,
as Agent shall have notified Borrower in writing that the provisions
of this subsection 2.10B(iv) are to become effective until such later
time, if any, as Agent shall have notified Borrower in writing that
such provisions are no longer to be effective, not to deposit any
monies into the Lock Box Accounts or to Concentration Accounts or to
otherwise permit any monies to be deposited into any of such accounts,
except payments received in respect of Borrower's Accounts.
C. Transfer of Amounts Deposited in the Lock Box Accounts to the
Concentration Accounts. Borrower shall cause all available funds deposited in
each Lock Box Account to be automatically transferred on each Business Day to
the applicable Concentration Account in accordance with the terms of the
applicable Lock Box Agreement.
D. Transfer of Amounts Deposited in the Concentration Accounts to
the BTCo Account. Borrower shall cause all available funds deposited in each
Concentration Account to be transferred on each Business Day to the BTCo
Account. Any amounts so transferred to the BTCo Account first shall be applied
-----
as provided in subsection 2.4B(iii)(i) to the extent therein provided and
thereafter, so long as no Event of Default or Potential Event of Default shall
----------
have occurred and be continuing, shall be available for disbursement to the
applicable Loan Parties for working capital and other general corporate
purposes.
E. Treatment of Accounts. With respect to Accounts of account
debtors other than Subsidiaries of Borrower, Borrower shall not, nor shall it
permit any Subsidiary (whether a Domestic Subsidiary or Foreign Subsidiary) to,
without Agent's prior written consent, grant any extension of the time of
payment of any Account, compromise or settle any Account for less than the full
amount thereof, release, in whole or in part, any Person or property liable for
the payment thereof, or allow any credit or discount whatsoever thereon, except,
prior to the occurrence of an Event of Default, in accordance with their usual
and customary business practices.
F. Borrower to Provide Information. Borrower shall, at such
intervals as Agent may reasonably request, furnish such statements, schedules
and/or information as Agent may reasonably request relating to Borrower's and
its Subsidiaries' (Domestic Subsidiaries and
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Foreign Subsidiaries) Accounts and the collection, deposit and transfer of
payments in respect thereof, including, without limitation, all invoices
evidencing such Accounts.
2.11 Collection, Deposit and Transfer of Payments in Respect of Accounts
-------------------------------------------------------------------
of Foreign Subsidiaries.
-----------------------
Borrower shall cause each of its Foreign Loan Parties (unless
otherwise agreed to by Agent in its reasonable discretion) to maintain in effect
at all times a system of accounts and procedures reasonably satisfactory to
Agent for the collection and deposit of payments in respect of such Person's
Accounts and, following notice by Agent upon the occurrence of a Potential Event
of Default under subsection 8.1 of this Agreement or an Event of Default, the
transfer of amounts so deposited to the applicable Concentration Account and
BTCo Account.
Section 3. LETTERS OF CREDIT
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations
---------------------------------------------------------------------
Therein.
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A. Letters of Credit. In addition to Borrower requesting that
Revolving Lenders make Revolving Loans pursuant to subsection 2.1A(ii), Borrower
may request, in accordance with the provisions of this subsection 3.1, from time
to time during the period from the Closing Date to but excluding the 30th day
prior to the Revolving Loan Commitment Termination Date, that one or more
Revolving Lenders issue Letters of Credit for the account of Borrower for the
purposes specified in the definition of Commercial Letter of Credit and Standby
Letter of Credit. Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of Borrower herein set forth,
any one or more Revolving Lenders may, but (except as provided in subsection
3.1B(ii)) shall not be obligated to, issue such Letters of Credit in accordance
with the provisions of this subsection 3.1; provided that Borrower shall not
request that any Revolving Lender issue (and no Revolving Lender shall issue):
(i) any Letter of Credit if, after giving effect to such
issuance any Borrowing Limitation would be exceeded;
(ii) any Letter of Credit if, after giving effect to such
issuance, the Letter of Credit Usage would exceed $200,000,000;
(iii) any Letter of Credit which would require drawings other
than sight drawings; or
(iv) any Standby Letter of Credit having an expiration date
later than the earlier of (a) five Business Days prior to the
Revolving Loan Commitment Termination Date and (b) the date which is
one year after the date of issuance of such Standby Letter of Credit;
provided that the immediately preceding clause (b) shall not prevent
any Issuing Lender from agreeing that a Standby Letter of Credit will
automatically be extended for one or more successive periods not to
exceed one year each unless such Issuing Lender elects not to extend
for any such additional period in accordance with the terms of such
Letter of Credit; and provided, further that such Issuing Lender shall
elect not to extend such Standby
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Letter of Credit if it has knowledge that an Event of Default has
occurred and is continuing (and has not been waived in accordance with
subsection 10.6 or cured in accordance with the terms hereof) at the
time such Issuing Lender must elect whether or not to allow such
extension; or
(v) any Commercial Letter of Credit having an expiration date
(a) later than the earlier of (X) the date which is 30 days prior to
the Revolving Loan Commitment Termination Date and (Y) the date which
is 180 days from the date of issuance of such Commercial Letter of
Credit or (b) that is otherwise unacceptable to the applicable Issuing
Lender in its reasonable discretion; or
(vi) unless Agent and the applicable Issuing Lender shall have
approved the issuance of a specific Letter of Credit in a foreign
currency, any Letter of Credit denominated in a currency other than an
Approved Currency or other currency which is freely tradable and
freely convertible into U.S. Dollars and, with respect to any
Commercial Letter of Credit, as to which Borrower has entered into an
appropriate Hedge Agreement.
For the purposes of making any determinations hereunder with respect
to a Letter of Credit denominated in a currency other than Dollars, the stated
amount of such Letter of Credit shall be valued based on the applicable Exchange
Rate for such currency as of the applicable date of determination.
B. Mechanics of Issuance.
(i) Notice of Issuance. Whenever Borrower desires the issuance
------------------
of a Letter of Credit, Borrower shall deliver to Agent a Request for
Issuance of Letter of Credit in the form of Exhibit III annexed hereto
-------
no later than 12:00 Noon (New York City time) at least three (3)
Business Days (in the case of Standby Letters of Credit) or five
Business Days (in the case of Commercial Letters of Credit), or such
shorter period as may be agreed to by the Issuing Lender in any
particular instance, in advance of the proposed date of issuance. The
Issuing Lender, in its reasonable discretion, may require changes in
the text of the proposed Letter of Credit or any documents described
in or attached to the Request for Issuance of Letter of Credit.
Borrower shall notify the applicable Issuing Lender (and
Agent, if Agent is not such Issuing Lender) prior to the issuance of
any Letter of Credit in the event that any of the matters to which
Borrower is required to certify in the applicable Request for Issuance
of Letter of Credit are no longer true and correct as of the proposed
date of issuance of such Letter of Credit, and upon the issuance of
any Letter of Credit Borrower shall be deemed to have re-certified, as
of the date of such issuance, as to the matters to which Borrower is
required to certify in the applicable Request for Issuance of Letter
of Credit.
(ii) Determination of Issuing Lender. Upon receipt by Agent of a
-------------------------------
Request for Issuance of Letter of Credit pursuant to subsection
3.1B(i) requesting
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the issuance of a Letter of Credit, in the event Agent elects to issue
such Letter of Credit, Agent shall promptly so notify Borrower, and
Agent shall be the Issuing Lender with respect thereto. In the event
that Agent, in its sole discretion, elects not to issue such Letter of
Credit, Agent shall promptly so notify Borrower, whereupon Borrower
may request any other Lender to issue such Letter of Credit by
delivering to such Lender a copy of the applicable Request for
Issuance of Letter of Credit. Any Lender so requested to issue such
Letter of Credit shall promptly notify Borrower and Agent whether or
not, in its sole discretion, it has elected to issue such Letter of
Credit, and any such Lender which so elects to issue such Letter of
Credit shall be the Issuing Lender with respect thereto. In the event
that all other Lenders shall have declined to issue such Letter of
Credit, notwithstanding the prior election of Agent not to issue such
Letter of Credit, Agent shall be obligated to issue such Letter of
Credit and shall be the Issuing Lender with respect thereto,
notwithstanding the fact that the Letter of Credit Usage with respect
to such Letter of Credit and with respect to all other Letters of
Credit issued by Agent, when aggregated with Agent's outstanding
Revolving Loans, may exceed Agent's Revolving Loan Commitment then in
effect.
(iii) Issuance of Letter of Credit. Upon satisfaction or waiver
----------------------------
(in accordance with subsection 10.6) of the conditions set forth in
subsection 4.3, the Issuing Lender shall issue the requested Letter of
Credit in accordance with the Issuing Lender's standard operating
procedures.
(iv) Notification to Lenders. Promptly after the issuance of or
-----------------------
amendment to a Standby Letter of Credit, the Issuing Lender shall
promptly notify the Agent and Borrower, in writing, of such issuance
or amendment, and such notice must be accompanied by a copy of such
issuance or amendment. Promptly upon receipt of such notice, the Agent
shall notify each other Lender of such issuance or amendment, and if
so requested by a Lender, the Agent shall furnish such Lender with a
copy of such issuance or amendment. With regards to Commercial Letters
of Credit, each Issuing Lender shall on the first Business Day of each
week furnish the Agent (with a copy to Borrower), by facsimile, with a
report of the daily aggregate outstanding Commercial Letters of Credit
issued by such Issuing Lender.
C. Lenders' Purchase of Participations in Letters of Credit.
Immediately upon the issuance of each Letter of Credit, each Lender shall be
deemed to, and hereby agrees to, have irrevocably purchased from the Issuing
Lender a participation in such Letter of Credit and any drawings honored
thereunder in an amount equal to such Lender's Pro Rata Share of the maximum
amount which is or at any time may become available to be drawn thereunder.
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3.2 Letter of Credit Fees.
---------------------
Borrower agrees to pay the following amounts with respect to Letters
of Credit issued hereunder:
(i) with respect to each Letter of Credit, (a) a fronting fee,
payable directly to the applicable Issuing Lender for its own account,
equal to the greater of (X) $500 and (Y) 0.25% per annum of the daily
amount available to be drawn under such Letter of Credit and (b) a
letter of credit fee, payable to Agent for the account of Revolving
Lenders, equal to the applicable Eurodollar Rate Margin for Revolving
Loans multiplied by the daily amount available to be drawn under such
Letter of Credit, in each case payable in arrears on and to (but
excluding) the first Business Day of each March, June, September and
December of each year and computed on the basis of a 360-day year for
the actual number of days elapsed;
(ii) with respect to the issuance, amendment or transfer of
each Letter of Credit and each payment of a drawing made thereunder
(without duplication of the fees payable under clause (i) above),
documentary and processing charges, payable directly to the applicable
Issuing Lender for its own account, in accordance with such Issuing
Lender's standard schedule for such charges in effect at the time of
such issuance, amendment, transfer or payment, as the case may be; and
(iii) for purposes of calculating any fees payable under clause
(i) of this subsection 3.2, the daily amount available to be drawn
under any Letter of Credit shall be determined as of the close of
business on any date of determination and any amount which is
denominated in a currency other than Dollars shall be valued based on
the applicable Exchange Rate for such currency as of the applicable
date of determination. Promptly upon receipt by Agent of any amount
described in clause (i)(b) of this subsection 3.2, Agent shall
distribute to each Revolving Lender its Pro Rata Share of such amount.
3.3 Drawings and Reimbursement of Amounts Drawn Under Letters of Credit.
-------------------------------------------------------------------
A. Responsibility of Issuing Lender With Respect to Drawings. In
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Lender shall be responsible only to examine the
documents delivered under such Letter of Credit with reasonable care so as to
ascertain whether they appear on their face to be in accordance with the terms
and conditions of such Letter of Credit.
B. Reimbursement by Borrower of Amounts Paid Under Letters of
Credit. In the event an Issuing Lender has determined to honor a drawing under
a Letter of Credit issued by it, such Issuing Lender shall immediately notify
Borrower and Agent, and Borrower shall reimburse such Issuing Lender on or
before the Business Day immediately following the date on which such drawing is
honored (the "Reimbursement Date") in an amount in Dollars and in same day funds
equal to the amount of such payment (and to the extent that such Letter of
Credit was issued for the benefit of a Foreign Loan Party, Borrower shall
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cause such Foreign Loan Party to reimburse Borrower by an amount equal to the
amount of such payment); provided that, anything contained in this Agreement to
the contrary notwithstanding, (i) unless Borrower shall have notified Agent and
such Issuing Lender prior to 10:00 A.M. (New York City time) on the date such
drawing is honored that Borrower intends to reimburse such Issuing Lender for
the amount of such payment with funds other than the proceeds of Revolving
Loans, Borrower shall be deemed to have given a timely Notice of Borrowing to
Agent requesting Lenders to make Revolving Loans that are Base Rate Loans on the
Reimbursement Date in an amount in Dollars (which amount, in the case of a
drawing under a Letter of Credit which is denominated in a currency other than
Dollars, shall be calculated by reference to the applicable Exchange Rate) equal
to the amount of such payment (and to the extent that such Letter of Credit was
issued for the benefit of a Foreign Loan Party, such Foreign Loan Party shall be
deemed to have requested an Intercompany Loan from Borrower in an amount equal
to the amount of such payment) and (ii) subject to satisfaction or waiver of the
conditions specified in subsection 4.2B, Lenders shall, on the Reimbursement
Date, make Revolving Loans that are Base Rate Loans in the amount of such
payment, the proceeds of which shall be applied directly by Agent to reimburse
such Issuing Lender for the amount of such payment; and provided, further that
if for any reason proceeds of Revolving Loans are not received by such Issuing
Lender on the Reimbursement Date in an amount equal to the amount of such
payment, Borrower shall reimburse such Issuing Lender, on demand, in an amount
in same day funds equal to the excess of the amount of such payment over the
aggregate amount of such Revolving Loans, if any, which are so received (and to
the extent that such Letter of Credit was issued for the benefit of a Foreign
Loan Party, Borrower shall cause such Foreign Loan Party to reimburse Borrower
in an amount equal to the excess of the amount of such payment over the
aggregate amount of such Revolving Loans). Nothing in this subsection 3.3B shall
be deemed to relieve any Lender from its obligation to make Revolving Loans on
the terms and conditions set forth in this Agreement, and Borrower shall retain
any and all rights it may have against any Lender resulting from the failure of
such Lender to make such Revolving Loans under this subsection 3.3B.
C. Payment by Revolving Lenders of Unreimbursed Amounts Paid Under
Letters of Credit.
(i) Payment by Revolving Lenders. In the event that Borrower
----------------------------
shall fail for any reason to reimburse any Issuing Lender as provided
in subsection 3.3B in an amount (calculated in the case of a drawing
under a Letter of Credit denominated in a currency other than Dollars,
by reference to the applicable Exchange Rate) equal to the amount of
any payment by such Issuing Lender under a Letter of Credit issued by
it, such Issuing Lender shall promptly notify each other Lender of the
unreimbursed amount of such honored drawing and of such other
Revolving Lender's respective participation therein based on such
Lender's Pro Rata Share. Each Revolving Lender shall make available to
such Issuing Lender an amount equal to its respective participation,
in Dollars and in same day funds, at the office of such Issuing Lender
specified in such notice, not later than 12:00 Noon (New York City
time) on the first business day (under the laws of the jurisdiction in
which such office of such Issuing Lender is located) after the date
notified by such Issuing Lender. In the event that any Lender fails to
make available to such Issuing Lender on such business day the amount
of such
85
Lender's participation in such Letter of Credit as provided in this
subsection 3.3C, such Issuing Lender shall be entitled to recover such
amount on demand from such Lender together with interest thereon at
the rate customarily used by such Issuing Lender for the correction of
errors among banks for three Business Days and thereafter at the Base
Rate. Nothing in this subsection 3.3C shall be deemed to prejudice the
right of any Lender to recover from any Issuing Lender any amounts
made available by such Lender to such Issuing Lender pursuant to this
subsection 3.3C in the event that it is determined by the final
judgment of a court of competent jurisdiction that the payment with
respect to a Letter of Credit by such Issuing Lender in respect of
which payment was made by such Lender constituted gross negligence or
willful misconduct on the part of such Issuing Lender.
(ii) Distribution to Lenders of Reimbursements Received From
-------------------------------------------------------
Borrower. In the event any Issuing Lender shall have been reimbursed
--------
by other Lenders pursuant to subsection 3.3C(i) for all or any portion
of any payment by such Issuing Lender under a Letter of Credit issued
by it, such Issuing Lender shall distribute to each other Lender that
has paid all amounts payable by it under subsection 3.3C(i) with
respect to such payment such other Lender's Pro Rata Share of all
payments subsequently received by such Issuing Lender from Borrower in
reimbursement of such payment under the Letter of Credit when such
payments are received. Any such distribution shall be made to a
Lender at its primary address set forth below its name on the
appropriate signature page hereof or at such other address as such
Lender may request.
D. Interest on Amounts Paid Under Letters of Credit.
(i) Payment of Interest by Borrower. Borrower agrees to pay to
-------------------------------
each Issuing Lender, with respect to payments under any Letters of
Credit issued by it, interest on the amount paid by such Issuing
Lender in respect of each such payment from the date a drawing is
honored to but excluding the date such amount is reimbursed by
Borrower (including any such reimbursement out of the proceeds of
Revolving Loans pursuant to subsection 3.3B) at a rate equal to (a)
for the period from the date such drawing is honored to but excluding
the Reimbursement Date, the rate then in effect under this Agreement
with respect to Revolving Loans that are Base Rate Loans and (b)
thereafter, a rate which is 2% per annum in excess of the rate of
interest otherwise payable under this Agreement with respect to
Revolving Loans that are Base Rate Loans. Interest payable pursuant
to this subsection 3.3D(i) shall be computed on the basis of a 360-day
year for the actual number of days elapsed in the period during which
it accrues and shall be payable on demand or, if no demand is made, on
the date on which the related drawing under a Letter of Credit is
reimbursed in full.
(ii) Distribution of Interest Payments by Issuing Lender.
---------------------------------------------------
Promptly upon receipt by any Issuing Lender of any payment of interest
pursuant to subsection 3.3D(i) with respect to a payment under a
Letter of Credit issued by it, (a) such Issuing Lender shall
distribute to each other Revolving Lender, out of the
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interest received by such Issuing Lender in respect of the period from
the date such drawing is honored to but excluding the date on which
such Issuing Lender is reimbursed for the amount of such payment
(including any such reimbursement out of the proceeds of Revolving
Loans pursuant to subsection 3.3B), the amount that such other Lender
would have been entitled to receive in respect of the letter of credit
fee that would have been payable in respect of such Letter of Credit
for such period pursuant to subsection 3.2 if no drawing had been
honored under such Letter of Credit, and (b) in the event such Issuing
Lender shall have been reimbursed by other Lenders pursuant to
subsection 3.3C(i) for all or any portion of such payment, such
Issuing Lender shall distribute to each other Lender that has paid all
amounts payable by it under subsection 3.3C(i) with respect to such
payment such other Lender's Pro Rata Share of any interest received by
such Issuing Lender in respect of that portion of such payment so
reimbursed by other Lenders for the period from the date on which such
Issuing Lender was so reimbursed by other Lenders to but excluding the
date on which such portion of such payment is reimbursed by Borrower.
Any such distribution shall be made to a Lender at its primary address
set forth below its name on the appropriate signature page hereof or
at such other address as such Lender may request.
3.4 Obligations Absolute.
--------------------
The obligation of Borrower to reimburse each Issuing Lender for
payments under the Letters of Credit issued by it and to repay any Revolving
Loans made by Lenders pursuant to subsection 3.3B and the obligations of Lenders
under subsection 3.3C(i) shall be unconditional and irrevocable and shall be
paid strictly in accordance with the terms of this Agreement under all
circumstances including any of the following circumstances:
(i) any lack of validity or enforceability of any Letter of
Credit;
(ii) the existence of any claim, set-off, defense or other
right which Borrower or any Lender may have at any time against a
beneficiary or any transferee of any Letter of Credit (or any Persons
for whom any such transferee may be acting), any Issuing Lender or
other Lender or any other Person or, in the case of a Lender, against
Borrower, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including any
underlying transaction between Borrower or one of its Subsidiaries and
the beneficiary for which any Letter of Credit was procured);
(iii) any draft or other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any
respect;
(iv) payment by the applicable Issuing Lender under any Letter
of Credit against presentation of a draft or other document which does
not substantially comply with the terms of such Letter of Credit;
87
(v) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of
Borrower or any of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document by
any party thereto; any failure of any Foreign Loan Party under any
Intercompany Note to make any payment to Borrower when due thereunder
or any other failure, breach or default of any nature whatsoever of
any Foreign Loan Party under any Intercompany Note, any Intercompany
Collateral Document or any Intercompany Note Guaranty; any failure by
Beloit to make any payment to Borrower when due under the Beloit Note
or any other failure, breach or default by Beloit or any of its
Subsidiaries of any nature whatsoever under the Beloit Note, Beloit
Collateral Documents or Beloit Note Guaranty;
(vii) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Potential Event of
Default shall have occurred and be continuing;
provided, in each case, that payment by the applicable Issuing Lender under the
--------
applicable Letter of Credit shall not have constituted gross negligence or
willful misconduct of such Issuing Lender under the circumstances in question
(as determined by a final judgment of a court of competent jurisdiction); upon
any such determination of gross negligence or willful misconduct, the applicable
Issuing Lender shall promptly reimburse Borrower for such payments made.
3.5 Indemnification; Nature of Issuing Lenders' Duties.
--------------------------------------------------
A. Indemnification. In addition to amounts payable as provided in
subsection 2.7, Borrower hereby agrees to protect, indemnify, pay and save
harmless each Issuing Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of outside counsel and allocated costs of
internal counsel) which such Issuing Lender may incur or be subject to as a
consequence, direct or indirect, of (i) the issuance of any Letter of Credit by
such Issuing Lender, other than as a result of (a) the gross negligence or
willful misconduct of such Issuing Lender as determined by a final judgment of a
court of competent jurisdiction or (b) subject to the following clause (ii), the
wrongful dishonor by such Issuing Lender of a proper demand for payment made
under any Letter of Credit issued by it or (ii) the failure of such Issuing
Lender to honor a drawing under any such Letter of Credit as a result of any act
or omission, whether rightful or wrongful, of any present or future de jure or
de facto Government Authority.
B. Nature of Issuing Lenders' Duties. As between Borrower and any
Issuing Lender, Borrower assumes all risks of the acts and omissions of, or
misuse of the Letters of Credit issued by such Issuing Lender by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation
of the foregoing, such Issuing Lender shall not be responsible for: (i) the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for and
issuance of any such Letter of
88
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
any such Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or ineffective for
any reason; (iii) failure of the beneficiary of any such Letter of Credit to
comply fully with any conditions required in order to draw upon such Letter of
Credit; (iv) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher; (v) errors in interpretation of technical terms; (vi)
any loss or delay in the transmission or otherwise of any document required in
order to make a drawing under any such Letter of Credit or of the proceeds
thereof; (vii) the misapplication by the beneficiary of any such Letter of
Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any
consequences arising from causes beyond the control of such Issuing Lender,
including any act or omission by a Government Authority specified in subsection
3.5A, and none of the above shall affect or impair, or prevent the vesting of,
any of such Issuing Lender's rights or powers hereunder.
In furtherance and extension and not in limitation of the specific
provisions set forth in the first paragraph of this subsection 3.5B, any action
taken or omitted by any Issuing Lender under or in connection with the Letters
of Credit issued by it or any documents and certificates delivered thereunder,
if taken or omitted in good faith, shall not put such Issuing Lender under any
resulting liability to Borrower.
Notwithstanding anything to the contrary contained in this subsection
3.5, Borrower shall retain any and all rights it may have against any Issuing
Lender for any liability arising solely out of the gross negligence or willful
misconduct of such Issuing Lender, as determined by a final judgment of a court
of competent jurisdiction.
SECTION 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make the Term Loans and Revolving Loans
and the issuance of Letters of Credit hereunder are subject to the satisfaction
of the following conditions.
4.1 Conditions to Term Loans and Initial Revolving Loans.
----------------------------------------------------
The obligations of Lenders to make the Term Loans and any Revolving
Loans to be made on the Closing Date are, in addition to the conditions
precedent specified in subsection 4.2, subject to prior or concurrent
satisfaction of the following conditions:
A. Loan Party Documents. On or before the Closing Date, Borrower
shall, and shall cause each other Loan Party to, deliver to Lenders (or to Agent
with sufficient originally executed copies, where appropriate, for each Lender)
the following with respect to Borrower or such Loan Party, as the case may be,
each, unless otherwise noted, dated the Closing Date:
(i) Copies of the Organizational Documents of such Person,
certified by the Secretary of State or equivalent Government
Authority of its jurisdiction of organization or, if such document is
of a type that may not be so certified, certified by the secretary or
similar officer of the applicable Loan Party, together
89
with a good standing certificate from the Secretary of State or
equivalent Government Authority of its jurisdiction of organization
and each other state or other jurisdiction in which such Person is
qualified to do business and, to the extent generally available, a
certificate or other evidence of good standing as to payment of any
applicable franchise or similar taxes from the appropriate taxing
authority of each of such jurisdictions, each dated a recent date
prior to the Closing Date; no such Organizational Document shall in
any manner prohibit, restrict, limit or require additional consents or
authorizations to be obtained from Borrower or any of its Subsidiaries
or any Governing Body thereof with respect to the transactions
contemplated by the Loan Documents, including without limitation the
granting or enforcement of any security interest granted to Agent on
behalf of Lenders (or to Borrower with respect to the Intercompany
Loans);
(ii) Resolutions of the Governing Body of such Person approving
and authorizing the execution, delivery and performance of the Loan
Documents and Related Agreements to which it is a party, certified as
of the Closing Date by the secretary or similar officer of such Person
as being in full force and effect without modification or amendment;
(iii) Signature and incumbency certificates of the officers of
such Person executing the Loan Documents to which it is a party;
(iv) Executed originals of the Loan Documents, including
without limitation, the Intercompany Notes, Intercompany Note
Guaranties and the Intercompany Collateral Documents, the Beloit
Collateral Documents, Beloit Note and Beloit Note Guaranty to which
such Person is a party; and
(v) Such other documents as Agent may reasonably request.
B. Fees. Borrower shall have paid to Agent and Arranger, for
distribution (as appropriate) to Agent, Arranger and Lenders, the fees payable
on the Closing Date referred to in subsection 2.3.
C. Corporate and Capital Structure; Ownership; Management.
(i) Corporate Structure. The corporate organizational
-------------------
structure of Borrower and its Subsidiaries shall be reasonably
satisfactory to Agent.
(ii) Capital Structure and Ownership. The capital structure and
-------------------------------
ownership of Borrower and its Subsidiaries shall be reasonably
satisfactory to Agent.
(iii) Management. The management of Borrower and its
----------
Subsidiaries shall be reasonably satisfactory to Agent.
D. Representations and Warranties; Performance of Agreements.
Borrower shall have delivered to Agent an Officer's Certificate, in form and
substance satisfactory to Agent, to the effect that the representations and
warranties in Section 5 hereof are
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true, correct and complete on and as of the Closing Date to the same extent as
though made on and as of that date (or, to the extent such representations and
warranties specifically relate to an earlier date, that such representations and
warranties were true, correct and complete on and as of such earlier date) and
that Borrower shall have performed all agreements and satisfied all conditions
which this Agreement provides shall be performed or satisfied by them on or
before the Closing Date except as otherwise disclosed to and agreed to in
writing by Agent.
E. Financial Statements; Pro Forma Balance Sheet. On or before the
Closing Date, Lenders shall have received from Borrower (i) audited financial
statements of Borrower and its Subsidiaries for Fiscal Years ended October 31 of
2000, 1999 and 1998, consisting of consolidated and consolidating balance sheets
and the related consolidated and consolidating statements of income,
stockholders' equity and cash flows for each such Fiscal Year, (ii) unaudited
financial statements of Borrower and its Subsidiaries as at January 31 and April
30, 2001, consisting of consolidated and consolidating balance sheets and the
related consolidated and consolidating statements of income, stockholders'
equity and cash flows for the three and six-month periods ending on such dates
(which may be in the form of Borrower's Quarterly Reports on Form 10-Q), all in
reasonable detail and certified by the chief financial officer of Borrower that
they fairly present the financial condition of Borrower and its Subsidiaries as
at the dates indicated and the results of their operations and their cash flows
for the periods indicated, subject to changes resulting from audit and normal
year-end adjustments, (iii) pro forma consolidated and consolidating balance
sheets of Borrower and its Subsidiaries as at fiscal month-end nearest to the
Closing Date, prepared in accordance with GAAP and reflecting the consummation
of (A) the reorganization contemplated in the Approved Plan of Reorganization
and (B) the financings and other transactions contemplated hereby, (iv)
projected monthly consolidated and consolidating statements of income, balance
sheets and statements of cash flows of Borrower and its Subsidiaries for each
remaining month in Fiscal Year 2001, and (v) any necessary revisions to the
projected consolidated and consolidating balance sheets and the related
consolidated and consolidating statements of income, operations, stockholders'
equity and cash flows for the four-and-one-half-year period after the Closing
Date as delivered to Agent prior to the Closing Date, all of the foregoing in
clauses (i) through (v) to be substantially consistent with any financial
statements previously delivered to Agent and, in the case of any such financial
statements for subsequent periods, substantially consistent with any projected
financial results for such periods previously delivered to Agent and otherwise
in form and substance satisfactory to Agent.
F. Borrowing Base Certificate; Minimum Availability. On or before
the Closing Date, Borrower shall have delivered to Agent and Lenders a Borrowing
Base Certificate relating to the Borrowing Base substantially in the form of
Exhibit VII annexed hereto, prepared as of a recent date prior to the Closing
-----------
Date. After giving effect to the Loans funded and the Letters of Credit issued
on the Closing Date, the Consolidated Borrowing Base shall exceed the Total
Utilization of Loan Commitments by not less than $50,000,000. On the Closing
Date after giving effect to the transactions contemplated hereby, Borrower and
its Subsidiaries shall have on hand not less than $30,000,000 in aggregate
amount of Cash and Cash Equivalents from sources other than proceeds of the
Loans.
G. Opinions of Counsel to Loan Parties. Lenders shall have received
(i) originally executed copies of one or more favorable written opinions of
Xxxxxxxx & Xxxxx,
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counsel for the Loan Parties, Xxxxxxxx Chance, Goodmans LLP and Xxxxxxxx Xxx,
special counsel for Loan Parties, in each case in form and substance reasonably
satisfactory to Agent and its counsel, dated as of the Closing Date and setting
forth substantially the matters in the opinions designated in Exhibits VIII-A,
---------------
Exhibit VIII-B, Exhibit VIII-C and Exhibit VIII-D, respectively, annexed hereto
-------------- -------------- --------------
and as to such other matters as Agent acting on behalf of Lenders may reasonably
request (this Credit Agreement constituting a written request by Borrower to
such counsel to deliver such opinions to Lenders) and (ii) copies of all
opinions issued by counsel to any Loan Party or issued to any Loan Party
relating to any transactions occurring on or about the Closing Date pursuant to
any of the Related Agreements, each of which opinions shall be accompanied by a
written authorization from counsel issuing such opinion stating that Agent and
Lenders may rely on such opinions as though such opinions were addressed to
Agent and Lenders.
H. Opinions of Agent's Counsel. Lenders shall have received
originally executed copies of one or more favorable written opinions of
O'Melveny & Xxxxx LLP, counsel to Agent, dated as of the Closing Date,
substantially in the form of Exhibit IX annexed hereto.
----------
I. Evidence of Insurance. Agent shall have reviewed the adequacy of
the types and amounts of Loan Parties' insurance coverage, including without
limitation, casualty, hazard, title, business interruption and product liability
insurance, and such review shall be in form and substance satisfactory to Agent.
Agent shall have received a certificate from Borrower's insurance broker or
other evidence satisfactory to it that all insurance required to be maintained
pursuant to subsection 6.4 is in full force and effect and that Agent on behalf
of Lenders has been named as additional insured and/or loss payee thereunder to
the extent required under subsection 6.4.
J. Reserved.
K. Environmental Reports. Agent shall have received reports and
other information, in form, scope and substance satisfactory to Agent in its
sole and absolute discretion, regarding environmental matters relating to
Borrower and its Subsidiaries and the Facilities.
L. Security Interests in Personal and Mixed Property. To the extent
not otherwise satisfied pursuant to subsection 4.1M, Agent shall have received
evidence satisfactory to it that Borrower, Guarantors, Foreign Loan Parties,
Beloit and any Beloit guarantors shall have taken or caused to be taken all such
actions, executed and delivered or caused to be executed and delivered all such
agreements, documents and instruments, and made or caused to be made all such
filings, recordings and registrations (other than the filing, recording or
registration of items described in clauses (iii), (iv) and (v) below) that may
be necessary or, in the opinion of Agent, (or a security trustee in lieu of
Borrower) desirable in order to create in favor of (1) Agent, for the benefit of
Lenders, and (2) Borrower, in the case of the Intercompany Collateral Documents
and Beloit Collateral Documents, which Intercompany Collateral Documents,
Intercompany Note Guaranties and Intercompany Notes and which Beloit Collateral
Documents, Beloit Note Guarantees and Beloit Note shall be assigned by Borrower
to Agent for the benefit of Lenders, a valid and (upon such filing and
recording) perfected First Priority
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security interest in substantially all of the personal and mixed property
Collateral. Such actions shall include the following:
(i) Schedules to Collateral Documents. Delivery to Agent of
---------------------------------
accurate and complete schedules to all of the applicable Collateral
Documents;
(ii) Stock Certificates and Instruments. Delivery to Agent of
----------------------------------
(a) certificates (which certificates shall be accompanied by
irrevocable undated stock powers, duly endorsed in blank (or, as
appropriate, irrevocable share transfer forms duly executed but
undated) and otherwise satisfactory in form and substance to Agent)
representing all capital stock and other ownership interests pledged
pursuant to the Security Agreement and any Foreign Pledge Agreement
and (b) all promissory notes (including without limitation the
Intercompany Notes and the Beloit Note) or other instruments (duly
endorsed, where appropriate, in a manner satisfactory to Agent)
evidencing the indebtedness pledged pursuant to the Security Agreement
and any Foreign Pledge Agreement, and (c) such other certificates and
instruments (duly endorsed or accompanied by duly executed instruments
of transfer or assignment in blank) representing other items
Collateral as Agent may require;
(iii) UCC Termination Statements. Delivery to Agent of UCC
--------------------------
termination statements or other equivalent terminations or releases
duly executed by all applicable Persons for filing in all applicable
jurisdictions as may be necessary to terminate any effective UCC
financing statements or fixture filings or other equivalent filings
with respect to the existing Indebtedness as set forth in subsection
4.1N(i) (other than any such financing statements or fixture filings
or other equivalent filings in respect of Liens permitted to remain
outstanding pursuant to the terms of this Agreement);
(iv) UCC Financing Statements and Fixture Filings. Delivery to
--------------------------------------------
Agent of UCC financing statements and, where appropriate, fixture
filings, or other equivalent filings duly executed by each applicable
Loan Party with respect to all personal and mixed property Collateral
of such Loan Party, for filing in all jurisdictions as may be
necessary or, in the opinion of Agent, desirable to perfect the
security interests created in such Collateral pursuant to the
Collateral Documents;
(v) PTO Cover Sheets, Etc. Delivery to Agent of all cover
---------------------
sheets or other documents or instruments required to be filed with the
PTO or other equivalent Governmental Authority in order to create or
perfect Liens in respect of any Intellectual Property Collateral;
(vi) Collateral Access Agreements. Delivery to Agent of
----------------------------
Collateral Access Agreements executed and delivered by each landlord,
mortgagee or other bailee in respect of any Real Property where any
Collateral to be included in any Borrowing Base is located;
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(vii) Cash Management. Delivery to Agent of a Lock Box
---------------
Agreement or a Blocked Account Agreement executed by each Person that
is a party thereto with respect to each Deposit Account listed on
Schedule I annexed to the Security Agreement (other than the BT
Concentration Account); and
(viii) Opinions of Local Counsel. To the extent requested by
-------------------------
Agent, delivery to Agent of opinions of counsel under the laws of each
jurisdiction in which any Loan Party is incorporated or organized or
in which any Loan Party or any personal or mixed property Collateral
is located with respect to the creation and perfection of the security
interests in favor of Agent in such Collateral and such other matters
governed by the laws of such jurisdictions regarding such security
interests as Agent may reasonably request, in each case in form and
substance reasonably satisfactory to Agent.
M. Closing Date Mortgages; Closing Date Mortgage Policies; Etc.
Agent shall have received from Borrower, each applicable Guarantor and Foreign
Loan Party:
(i) Closing Date Mortgages. Fully executed and notarized
----------------------
Mortgages (each a "Closing Date Mortgage" and, collectively, the
"Closing Date Mortgages"), duly recorded in all appropriate places in
all applicable jurisdictions, encumbering each fee or freehold Real
Property Asset listed in Schedule 4.1M annexed hereto, and Borrower
-------------
shall have used its best efforts to deliver to Agent a fully executed
and notarized Closing Date Mortgage, duly recorded in all appropriate
places in the applicable jurisdiction, encumbering the Leasehold
Property in Mesa, Arizona as listed in Schedule 4.1M annexed hereto
-------------
(each of the foregoing a "Closing Date Mortgaged Property" and,
collectively, the "Closing Date Mortgaged Properties") and in the case
of any Intercompany Collateral Documents duly assigned by Borrower to
Agent for the benefit of Lenders;
(ii) Opinions of Local Counsel. An opinion of counsel (which
-------------------------
counsel shall be reasonably satisfactory to Agent) in each
jurisdiction in which a Closing Date Mortgaged Property is located
with respect to the enforceability of the form(s) of Closing Date
Mortgages to be recorded in such jurisdiction and such other matters
as Agent may reasonably request, in each case in form and substance
reasonably satisfactory to Agent;
(iii) Landlord Consents and Estoppels; Recorded Leasehold
---------------------------------------------------
Interests. In the case of each Closing Date Mortgaged Property
---------
consisting of a Leasehold Property, (a) subject to the best efforts
qualification with respect to the Mesa, Arizona Leasehold Property as
described in subsection 4.1M(i), a Landlord Consent and Estoppel with
respect thereto and (b) evidence that such Leasehold Property is a
Recorded Leasehold Interest;
(iv) Title Insurance. (a) ALTA mortgagee title insurance
---------------
policies or unconditional commitments therefor or equivalent title
protection (the "Closing Date Mortgage Policies") issued by the Title
Company with respect to the
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Closing Date Mortgaged Properties listed in Part A of Schedule 4.1M
annexed hereto, in amounts not less than the respective amounts
designated therein with respect to any particular Closing Date
Mortgaged Properties, insuring fee simple title to, or a valid
leasehold interest in, each such Closing Date Mortgaged Property
vested in such Loan Party and assuring Agent that the applicable
Closing Date Mortgages create valid and enforceable First Priority
mortgage Liens on the respective Closing Date Mortgaged Properties
encumbered thereby, subject only to a standard survey exception, which
Closing Date Mortgage Policies (1) shall include an endorsement for
mechanics' liens, for future advances under this Agreement and for any
other matters reasonably requested by Agent and (2) shall provide for
affirmative insurance and such reinsurance as Agent may reasonably
request, all of the foregoing in form and substance reasonably
satisfactory to Agent; (b) evidence satisfactory to Agent that such
Loan Party has (i) delivered to the Title Company all certificates and
affidavits required by the Title Company in connection with the
issuance of the Closing Date Mortgage Policies and (ii) paid to the
Title Company or to the appropriate governmental authorities all
expenses and premiums of the Title Company in connection with the
issuance of the Closing Date Mortgage Policies and all recording and
stamp taxes (including mortgage recording and intangible taxes)
payable in connection with recording the Closing Date Mortgages in the
appropriate real estate records; and (c) with respect to Closing Date
Mortgaged Properties in any jurisdiction other than the United States,
the customary equivalent to the foregoing, as reasonably determined by
Agent, under applicable law and customary practice in such
jurisdiction;
(v) Title Reports. With respect to each Closing Date Mortgaged
-------------
Property listed in Part B of Schedule 4.1M annexed hereto, a title
-------------
report issued by the Title Company with respect thereto, dated not
more than 30 days prior to the Closing Date, or in any jurisdiction
other than the United States, the customary equivalent to the
foregoing, in each case satisfactory in form and substance to Agent;
(vi) Copies of Documents Relating to Title Exceptions. Copies
------------------------------------------------
of all recorded documents listed as exceptions to title or otherwise
referred to in the Closing Date Mortgage Policies or in the title
reports delivered pursuant to subsection 4.1M(v);
(vii) Matters Relating to Flood Hazard Properties. (a)
-------------------------------------------
Evidence, which may be in the form of a letter from an insurance
broker or a municipal engineer, as to whether (1) any Closing Date
Mortgaged Property is a Flood Hazard Property and (2) the community in
which any such Flood Hazard Property is located is participating in
the National Flood Insurance Program, (b) if there are any such Flood
Hazard Properties, such Loan Party's written acknowledgement of
receipt of written notification from Agent (1) as to the existence of
each such Flood Hazard Property and (2) as to whether the community in
which each such Flood Hazard Property is located is participating in
the National Flood Insurance Program, and (c) in the event any such
Flood Hazard Property is located in a
95
community that participates in the National Flood Insurance Program,
evidence that such Loan Party has obtained flood insurance in respect
of such Flood Hazard Property to the extent required under the
applicable regulations of the Board of Governors of the Federal
Reserve System; and
(viii) Environmental Indemnity. An environmental indemnity
-----------------------
agreement, substantially in form of Exhibit XVI annexed hereto and
-----------
otherwise satisfactory in form and substance to Agent and its counsel,
with respect to the indemnification of Agent and Lenders for any
liabilities that may be imposed on or incurred by any of them as a
result of any Hazardous Materials Activity.
N. Matters Relating to Existing Indebtedness of Borrower and its
Subsidiaries.
(i) Termination of Certain Existing Indebtedness and Related
--------------------------------------------------------
Liens; Existing Letters of Credit. On the Closing Date, Borrower and
---------------------------------
its Subsidiaries shall have (a) repaid in full all Indebtedness
outstanding under the DIP Facility (the aggregate principal amount of
which Indebtedness shall not exceed $81,000,000), under the credit
facility with National Westminister Bank Plc and the eight bank credit
facilities provided to certain of the Australian Loan Parties (the
combined aggregate outstanding principal amount of which shall not
exceed $74,000,000, (b) terminated any commitments to lend or make
other extensions of credit thereunder, (c) delivered to Agent all
documents or instruments necessary to release all Liens securing
Indebtedness or other obligations of Borrower and its Subsidiaries
thereunder, and (d) made arrangements satisfactory to Agent with
respect to the cancellation of any letters of credit outstanding
thereunder or the issuance of Letters of Credit to support the
obligations of Borrower and its Subsidiaries with respect thereto.
(ii) Existing Indebtedness to Remain Outstanding. Agent shall
-------------------------------------------
have received an Officer's Certificate of Borrower stating that, after
giving effect to the transactions described in this subsection 4.1N,
the Indebtedness of Borrower and its Subsidiaries (other than
Indebtedness permitted under subsections 7.1(i), (iii), (ix) and (x))
shall consist of Indebtedness (other than intercompany Indebtedness)
in an aggregate amount not to exceed $14,100,000 in respect of certain
Indebtedness owed to the United States Environmental Protection Agency
and unsecured industrial revenue bonds as described in Schedule 7.1
------------
annexed hereto. The terms and conditions of all such Indebtedness
shall be in form and in substance satisfactory to Agent.
O. Collateral Audits and Appraisals. Agent shall have received (i)
audits of the Inventory and Accounts of Borrower and its Subsidiaries in form,
scope and substance satisfactory to Agent and the Lenders, and (ii) appraisals,
in form, scope and substance satisfactory to Agent and satisfying the
requirements of any applicable laws and regulations, concerning the value of any
Real Property Assets constituting Closing Date Mortgaged Properties (in each
case to the extent required under such laws and regulations as determined by
96
Agent in its sole discretion) and the value of machinery and equipment, tools
and Intellectual Property of Borrower and its Subsidiaries designated by Agent.
P. Company Bankruptcy Proceeding.
(i) Plan of Reorganization. The Plan of Reorganization and all
----------------------
amendments, modifications, revisions and restatements thereof, if any,
shall have been delivered to Agent and shall be in form and substance
acceptable to Agent (in such form approved by Agent, the "Approved
Plan of Reorganization"). Except as set forth in modification motions
filed with the Bankruptcy Court and served upon and approved by Agent,
there shall have been no material modifications, amendments, revisions
or restatements of the Approved Plan of Reorganization. Any
representation and warranty made by Borrower or any Debtor Subsidiary
in the Approved Plan of Reorganization shall be accurate, true,
correct and complete in all material respects as of the Closing Date.
The Approved Plan of Reorganization (A) shall provide for the payments
described in subsection 2.5A(i) and the issuance of the New Senior
Debt; and (B) upon satisfaction of all conditions to the effectiveness
of this Agreement, shall become effective in accordance with its terms
without waiver of any condition to such effectiveness that, in Agent's
reasonable judgment, is material.
(ii) Confirmation Order. The Confirmation Order shall have been
------------------
delivered to Agent and shall be in form and substance acceptable to
Agent. The Confirmation Order shall be the final order of the
Bankruptcy Court and shall have been entered by the Bankruptcy Court.
All applicable periods concerning any appeal of the Confirmation
Order, as entered by the Bankruptcy Court, shall have expired. The
Confirmation Order shall be in full force and effect and shall not
have been stayed pending any appeal, and no appeal or petition for
review or for rehearing shall have been taken or shall be pending.
(iii) Approval of Fees Related to Exit Financing. The
------------------------------------------
Bankruptcy Court order approving the fees payable to Agent and
Arranger under those certain letter agreements dated April 2, 2001
between Borrower and BTCo concerning the credit facilities described
in this Agreement, shall be in full force and effect, without
modification or amendment except to the extent approved by Agent.
Q. New Senior Debt. True, correct and complete copies of all
documents, instruments and agreements governing or concerning the New Senior
Debt shall have been delivered to Agent, and rates of interest, covenants,
defaults and all other terms and conditions thereunder shall be in form and
substance reasonably acceptable to Agent. Without limiting the generality of
the foregoing, the New Senior Debt shall be unsecured and shall have no
scheduled payments of principal thereunder payable prior to April 30, 2006.
R. Closing Date Leverage Ratio. Agent shall have received evidence
reasonably satisfactory to it that, on the Closing Date and based on the
financial statements described in subsection 4.1E(ii), the Consolidated Leverage
Ratio of Borrower and its Subsidiaries shall not exceed 3.5x.
97
S. No Material Adverse Effect. Since October 31, 2000, no event or
change shall have occurred that has resulted in, caused or evidences, either in
any case or in the aggregate, a Material Adverse Effect.
T. No Disruption of Markets. Since April 2, 2001 there shall have
been no material adverse change in, and as of the Closing Date there shall not
have occurred and be continuing a disruption of or change in, the financial,
banking and capital markets that would have a material adverse effect on the
syndication markets for credit facilities similar to the credit facilities set
forth in this Agreement, all as determined by Agent in its reasonable
discretion.
U. Due Diligence. The results of Agent's due diligence
investigation into all aspects of Borrower, its Subsidiaries, their properties
and all aspects of the transactions contemplated by this Agreement shall be
satisfactory to Agent in all material respects, and no information shall have
been discovered by Agent that would cause the results of any prior due diligence
investigation not to be satisfactory to Agent in all material respects.
V. Cash Management System. The cash management system of Borrower
and its Subsidiaries shall be reasonably satisfactory in form and substance to
Agent.
W. Completion of Proceedings. All corporate and other proceedings
taken or to be taken in connection with the transactions contemplated hereby and
all documents incidental thereto not previously found acceptable by Agent,
acting on behalf of Lenders, and its counsel shall be satisfactory in form and
substance to Agent and such counsel, and Agent and such counsel shall have
received all such counterpart originals or certified copies of such documents as
Agent may reasonably request.
4.2 Conditions to All Loans.
-----------------------
The obligations of Lenders to make Loans on each Funding Date are
subject to the following further conditions precedent:
A. Agent shall have received before that Funding Date, in accordance
with the provisions of subsection 2.1B, an originally executed Notice of
Borrowing, in each case signed by a duly authorized Officer of Borrower.
B. As of that Funding Date:
(i) The representations and warranties contained herein and in
the other Loan Documents shall be true, correct and complete on and as
of that Funding Date to the same extent as though made on and as of
that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case such
representations and warranties shall have been true, correct and
complete on and as of such earlier date;
(ii) No event shall have occurred and be continuing or would
result from the consummation of the borrowing contemplated by such
Notice of Borrowing that would constitute an Event of Default or a
Potential Event of Default;
98
(iii) Each Loan Party shall have performed in all material
respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by it on or
before that Funding Date;
(iv) No order, judgment or decree of any arbitrator or
Government Authority shall purport to enjoin or restrain any
Lender from making the Loans to be made by it on that Funding
Date; and
(v) Borrower shall have delivered such other certificates
or documents that Agent shall reasonably request, in form and
substance satisfactory to Agent.
4.3 Conditions to Letters of Credit.
-------------------------------
The issuance of any Letter of Credit hereunder (whether or not
the applicable Issuing Lender is obligated to issue such Letter of Credit) is
subject to the following conditions precedent:
A. On or before the date of issuance of the initial Letter of
Credit pursuant to this Agreement, the initial Loans shall have been made.
B. On or before the date of issuance of such Letter of Credit,
Agent shall have received, in accordance with the provisions of subsection
3.1B(i), an originally executed Request for Issuance of Letter of Credit in each
case signed by a duly authorized Officer of Borrower, together with all other
information specified in subsection 3.1B(i) and such other documents or
information as the applicable Issuing Lender may reasonably require in
connection with the issuance of such Letter of Credit.
C. On the date of issuance of such Letter of Credit, all
conditions precedent described in subsection 4.2B shall be satisfied to the same
extent as if the issuance of such Letter of Credit were the making of a Loan and
the date of issuance of such Letter of Credit were a Funding Date.
SECTION 5. BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to
make the Loans, to induce Issuing Lenders to issue Letters of Credit and to
induce Lenders to purchase participations therein, Borrower represents and
warrants to each Lender, on the date of this Agreement, on each Funding Date and
on the date of issuance of each Letter of Credit, that the following statements
are true, correct and complete:
5.1 Organization, Powers, Qualification, Good Standing, Business and
----------------------------------------------------------------
Subsidiaries.
------------
A. Organization and Powers. Borrower and each of its Subsidiaries
is a corporation, partnership, trust, limited liability company or, with respect
to Harnischfeger ULC, an unlimited liability company, duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization
as specified in Schedule 5.1 annexed hereto, as may be supplemented from time to
------------
time pursuant to the provisions of subsection 6.1(xvi), except, with
99
respect to any Subsidiary that is not a Loan Party, where such failure to be
duly organized, validly existing or in good standing has not had and will not
have, individually or in the aggregate, a Material Adverse Effect. Borrower and
each of its Subsidiaries has all requisite power and authority to own and
operate its properties, to carry on its business as now conducted and as
proposed to be conducted, to enter into the Loan Documents and Related
Agreements to which it is a party and to carry out the transactions contemplated
thereby, except where such failures to do so has not had and will not have,
individually or in the aggregate, a Material Adverse Effect.
B. Qualification and Good Standing. Borrower and each of its
Subsidiaries is qualified to do business and in good standing in every
jurisdiction where its assets are located and wherever necessary to carry out
its business and operations, except in jurisdictions where the failure to be so
qualified or in good standing has not had and will not have a Material Adverse
Effect.
C. Conduct of Business. Other than immaterial exceptions, Borrower
and each of its Subsidiaries is engaged only in the businesses permitted to be
engaged in pursuant to subsection 7.14.
D. Subsidiaries. Other than immaterial exceptions, all of the
Subsidiaries of Borrower and their jurisdictions or organizations are identified
in Schedule 5.1 annexed hereto, as said Schedule 5.1 may be supplemented from
------------ ------------
time to time pursuant to the provisions of subsection 6.1(xvi). The capital
stock or similar equity interests of each of the Subsidiaries of Borrower
identified in Schedule 5.1 annexed hereto (as so supplemented) are duly
------------
authorized, validly issued, fully paid and nonassessable and none of such
capital stock or similar equity interests constitutes Margin Stock. Schedule
--------
5.1 annexed hereto (as so supplemented) correctly sets forth the ownership
---
interest of Borrower and each of its Subsidiaries in each of the Subsidiaries of
Borrower identified therein.
5.2 Authorization of Borrowing, etc.
--------------------------------
A. Authorization of Borrowing. The execution, delivery and
performance of the Loan Documents and the Related Agreements have been duly
authorized by all necessary action on the part of Borrower and each of its
Subsidiaries that is a party thereto.
B. No Conflict. Except to the extent the same would not reasonably
be expected to have a Material Adverse Effect, the execution, delivery and
performance by Borrower or any of its Subsidiaries of the Loan Documents and the
Related Agreements to which they are parties and the consummation of the
transactions contemplated by the Loan Documents and the Related Agreements do
not and will not (i) violate any provision of any law or any governmental rule
or regulation applicable to Borrower or any of its Subsidiaries, the
Organizational Documents of Borrower or any of its Subsidiaries or any order,
judgment or decree of any court or other Government Authority binding on
Borrower or any of its Subsidiaries, (ii) conflict with, result in a breach of
or constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of Borrower or any of its Subsidiaries, (iii) result in
or require the creation or imposition of any Lien upon any of the properties or
assets of Borrower or any of its Subsidiaries (other than any Liens created
under any of the Loan
100
Documents in favor of Agent on behalf of Lenders or any Lien created under the
Intercompany Collateral Documents in favor of Borrower to the extent such Lien
has been assigned to Agent), or (iv) require any approval of stockholders or any
approval or consent of any Person under any Contractual Obligation of Borrower
or any of its Subsidiaries, except for such approvals or consents which will be
obtained on or before the Closing Date and disclosed in writing to Lenders.
C. Governmental Consents. The execution, delivery and performance
by Borrower or any of its Subsidiaries of the Loan Documents and the Related
Agreements to which they are parties and the consummation of the transactions
contemplated by the Loan Documents and the Related Agreements do not and will
not require any Governmental Authorization other than the Confirmation Order
which has been obtained and is in full force and effect without any modification
or amendment other than as may be permitted pursuant to subsection 7.15.
D. Binding Obligation. Each of the Loan Documents and the Related
Agreements has been duly executed and delivered by Borrower and any of its
Subsidiaries that is a party thereto, as applicable and is the legally valid and
binding obligation of Borrower or any such Subsidiary, as applicable,
enforceable against such Loan Party in accordance with its respective terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability.
5.3 Financial Condition.
-------------------
Borrower has heretofore delivered to Lenders, at Lenders' request, the
financial statements and information described in subsection 4.1E. All such
statements other than pro forma financial statements were prepared in conformity
with GAAP and fairly present, in all material respects, the financial position
(on a consolidated and, where applicable, consolidating basis) of the entities
described in such financial statements as at the respective dates thereof and
the results of operations and cash flows (on a consolidated and, where
applicable, consolidating basis) of the entities described therein for each of
the periods then ended, subject, in the case of any such unaudited financial
statements, to changes resulting from audit and normal year-end adjustments.
Neither Borrower nor any of its Subsidiaries have (and neither Borrower nor any
of its Subsidiaries will have following the funding of the initial Loans) any
Contingent Obligation, contingent liability or liability for taxes, long-term
lease or unusual forward or long-term commitment that, as of the Closing Date,
is not reflected in the foregoing financial statements or the notes thereto and,
as of any Funding Date subsequent to the Closing Date, is not reflected in the
most recent financial statements delivered to Lenders pursuant to subsection 6.1
or the notes thereto and that, in any such case, is material in relation to the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of Borrower or any of its Subsidiaries taken as a whole.
5.4 No Material Adverse Change; No Restricted Junior Payments.
---------------------------------------------------------
Since October 31, 2000, except as disclosed in the Disclosure
Statement and the Approved Plan of Reorganization, no event or change has
occurred that has resulted in, caused or evidences, either in any case or in the
aggregate, a Material Adverse Effect. Neither Borrower
101
nor any of its Subsidiaries has directly or indirectly declared, ordered, paid
or made, or set apart any sum or property for, any Restricted Junior Payment or
agreed to do so except as permitted by subsection 7.5.
5.5 Title to Properties; Liens; Real Property.
-----------------------------------------
A. Title to Properties; Liens. Borrower and its Subsidiaries have
(i) good, sufficient and legal title to (in the case of fee and freehold
interests in real property), (ii) valid leasehold interests in (in the case of
leasehold interests in real or personal property), or (iii) good title to (in
the case of all other personal property), all of their respective properties and
assets reflected in the financial statements referred to in subsection 5.3 or in
the most recent financial statements delivered pursuant to subsection 6.1, in
each case except for immaterial exceptions and for assets disposed of since the
date of such financial statements in the ordinary course of business or as
otherwise permitted under subsection 7.7. Except as permitted by this
Agreement, all such properties and assets are free and clear of Liens.
B. Real Property. As of the Closing Date, Schedule 5.5B annexed
-------------
hereto contains a true, accurate and complete in all material respects list of
(i) all fee and freehold interests in any Real Property Assets and (ii) all
leases, subleases or assignments of leases (together with all amendments,
modifications, supplements, renewals or extensions of any thereof) affecting
each Real Property Asset of Borrower or any of its Subsidiaries, regardless of
whether such Person is the landlord or tenant (whether directly or as an
assignee or successor in interest) under such lease, sublease or assignment.
Except as specified in Schedule 5.5B annexed hereto and except to the extent
-------------
that it could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect, each agreement listed in clause (ii) of the
immediately preceding sentence is in full force and effect and Borrower does not
have knowledge of any default that has occurred and is continuing thereunder,
and each such agreement constitutes the legally valid and binding obligation of
Borrower or any of its Subsidiaries, as applicable, enforceable against such
Person in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by equitable principles.
C. Intellectual Property. As of the Closing Date, Borrower and its
Subsidiaries own or have the right to use, all Intellectual Property used in the
conduct of their business, except where the failure to own or have such right to
use in the aggregate could not reasonably be expected to result in a Material
Adverse Effect. No claim has been asserted and is pending by any Person
challenging or questioning the use of any such Intellectual Property or the
validity or effectiveness of any such Intellectual Property, nor does Borrower
know of any valid basis for any such claim except for such claims that in the
aggregate could not reasonably be expected to result in a Material Adverse
Effect. The use of such Intellectual Property by Borrower and its Subsidiaries
does not infringe on the rights of any Person, except for such claims and
infringements that, in the aggregate, could not reasonably be expected to result
in a Material Adverse Effect. All federal and state and all foreign
registrations of and applications for Intellectual Property that are owned or
licensed by Borrower or any of its Subsidiaries on the Closing Date are
described on Schedule 5.5C annexed hereto.
-------------
102
5.6 Litigation; Violation of Law.
----------------------------
Except as set forth in Schedule 5.6 annexed hereto, there are no
------------
Proceedings (whether or not purportedly on behalf of Borrower or any of its
Subsidiaries) at law or in equity, or before or by any court or other Government
Authority (including any Environmental Claims) that are pending or, to the
knowledge of Borrower, threatened against or affecting Borrower or any of its
Subsidiaries or any property of Borrower or any of its Subsidiaries and that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. Neither Borrower nor any of its Subsidiaries (i) is in
violation of any applicable laws (including Environmental Laws), which
violation, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect, or (ii) is subject to or in default with
respect to any final judgments, writs, injunctions, decrees, rules or
regulations of any court or other Government Authority, that, individually or in
the aggregate, could reasonably be expected to result in a Material Adverse
Effect.
5.7 Payment of Taxes.
----------------
Except to the extent permitted by subsection 6.3 or otherwise provided
for in the Approved Plan of Reorganization, all material tax returns and reports
of Borrower and its Subsidiaries required to be filed by any of them have been
timely filed, and all material taxes shown on such tax returns to be due and
payable and all material assessments, fees and other governmental charges upon
Borrower and its Subsidiaries and upon their respective properties, assets,
income, businesses and franchises that are due and payable have been paid when
due and payable. Borrower knows of no proposed material tax assessment against
Borrower or any of its Subsidiaries that is not being actively contested by
Borrower or such Subsidiary in good faith and by appropriate proceedings;
provided that such reserves or other appropriate provisions, if any, as shall be
required in conformity with GAAP shall have been made or provided therefor.
5.8 Performance of Agreements; Materially Adverse Agreements; Material
------------------------------------------------------------------
Contracts.
---------
A. Neither Borrower nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect, of
such default or defaults, if any, could not reasonably be expected to result in
a Material Adverse Effect.
B. Neither Borrower nor any of its Subsidiaries is a party to or is
otherwise subject to any agreements or instruments or any charter or other
internal restrictions which, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.
C. Except as described in Schedule 5.8, all Material Contracts of
------------
Borrower and its Subsidiaries are in full force and effect and no material
defaults currently exist thereunder.
103
5.9 Governmental Regulation.
-----------------------
Neither Borrower nor any of its Subsidiaries is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation or under any comparable or equivalent
laws of any applicable Governmental Authority which may limit its ability to
incur Indebtedness or which may otherwise render all or any portion of the
Obligations unenforceable.
5.10 Securities Activities.
---------------------
A. Neither Borrower nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock.
B. Following application of the proceeds of each Loan, not more than
25% of the value of the assets (either of Borrower only, Borrower and any of its
Subsidiaries or of Borrower and its Subsidiaries on a consolidated basis)
subject to the provisions of subsection 7.2 or 7.7 or subject to any restriction
contained in any agreement or instrument, between Borrower and any Lender or any
Affiliate of any Lender, relating to Indebtedness and within the scope of
subsection 8.2, will be Margin Stock.
5.11 Employee Benefit Plans.
----------------------
A. Borrower, each of its Subsidiaries and each of their respective
ERISA Affiliates are in compliance in all material respects with all applicable
provisions and requirements of ERISA and the regulations and published
interpretations thereunder with respect to each Employee Benefit Plan, and have
performed in all material respects all their obligations under each Employee
Benefit Plan. Each Employee Benefit Plan that is intended to qualify under
Section 401(a) of the Internal Revenue Code has received a favorable
determination from the Internal Revenue Service that it is so qualified and
Borrower is not aware of any reason why such favorable determination letter
would be revoked.
B. No ERISA Event has occurred or is reasonably expected to occur
that could reasonably be expected, individually or in the aggregate for such
ERISA Events, to result in a material liability to Borrower.
C. As of the most recent valuation date for any Pension Plan, the
amount of unfunded benefit liabilities (as set forth in the most recent
actuarial valuation report), individually or in the aggregate for all Pension
Plans (excluding for purposes of such computation any Pension Plans with respect
to which assets exceed benefit liabilities), does not exceed $50,000,000.
D. As of the most recent valuation date for each Multiemployer Plan
for which the actuarial report is available, the potential liability of
Borrower, its Subsidiaries and their respective ERISA Affiliates for a complete
withdrawal from such Multiemployer Plan (within the meaning of Section 4203 of
ERISA), when aggregated with such potential liability
104
for a complete withdrawal from all Multiemployer Plans, based on information
available pursuant to Section 4221(e) of ERISA, does not exceed $3,000,000.
5.12 Certain Fees.
------------
No broker's or finder's fee or commission will be payable with respect
to this Agreement or any of the transactions contemplated hereby, and Borrower
hereby indemnifies Lenders against, and agrees that it will hold Lenders
harmless from, any claim, demand or liability for any such broker's or finder's
fees alleged to have been incurred in connection herewith or therewith and any
expenses (including reasonable fees, expenses and disbursements of counsel)
arising in connection with any such claim, demand or liability.
5.13 Environmental Protection.
------------------------
Except as set forth in Schedule 5.13 annexed hereto:
-------------
(i) neither Borrower nor any of its Subsidiaries nor any of
their respective Facilities or operations are subject to any
outstanding written order, consent decree or settlement agreement with
any Person relating to (a) any Environmental Law, (b) any
Environmental Claim, or (c) any Hazardous Materials Activity that,
individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect;
(ii) neither Borrower nor any of its Subsidiaries has received
any letter or request for information under Section 104 of the
Comprehensive Environmental Response, Compensation, and Liability Act
(42 U.S.C. (S) 9604) or any comparable state law or comparable law of
any other jurisdiction indicating a liability that could reasonably be
expected to have a Material Adverse Effect;
(iii) there are and, to Borrower's knowledge, have been no
conditions, occurrences, or Hazardous Materials Activities that could
reasonably be expected to form the basis of an Environmental Claim
against Borrower or any of its Subsidiaries that, individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect; and
(iv) compliance with all current or reasonably foreseeable
future requirements pursuant to or under Environmental Laws would not,
individually or in the aggregate, be reasonably expected to result in
a Material Adverse Effect.
5.14 Employee Matters.
---------------------
There is no strike or work stoppage in existence or threatened
involving Borrower or any of its Subsidiaries that could reasonably be expected
to result in a Material Adverse Effect.
105
5.15 Solvency.
--------
From and after the Closing Date and upon the incurrence of any
Obligations by any Loan Party on any date on which this representation is made,
the Loan Parties, taken as a whole, will be Solvent.
5.16 Matters Relating to Collateral.
------------------------------
A. Creation, Perfection and Priority of Liens. The execution and
delivery of the Collateral Documents by Loan Parties, together with (i) the
actions taken on or prior to the date hereof pursuant to subsections 4.1L, 4.1M,
6.9 and 6.10 and (ii) the delivery to Agent of any Pledged Collateral not
delivered to Agent at the time of execution and delivery of the applicable
Collateral Document (all of which Pledged Collateral has been so delivered) are
effective to create in favor of Agent for the benefit of Lenders, as security
for the respective Secured Obligations (as defined in the applicable Collateral
Document in respect of any Collateral), a valid and perfected First Priority
Lien on all of the Collateral, including without limitation the Collateral
subject to the Intercompany Collateral Documents and Beloit Collateral
Documents, and all filings and other actions necessary or desirable to perfect
and maintain the perfection and First Priority status of such Liens have been
duly made or taken and remain in full force and effect, other than the filing of
any UCC financing statements or equivalent filings delivered to Agent for filing
(but not yet filed) and the periodic filing of UCC continuation statements in
respect of UCC financing statements or equivalent filings filed by or on behalf
of Agent.
B. Governmental Authorizations. No authorization, approval or other
action by, and no notice to or filing with, any Government Authority is required
for either (i) the pledge or grant by any Loan Party of the Liens purported to
be created in favor of Agent pursuant to any of the Collateral Documents other
than the Confirmation Order which has been obtained or (ii) the exercise by
Agent of any rights or remedies in respect of any Collateral (whether
specifically granted or created pursuant to any of the Collateral Documents or
created or provided for by applicable law), except for filings, recordings or
registrations contemplated by subsection 5.16A and except as may be required, in
connection with the disposition of any Pledged Collateral, by laws generally
affecting the offering and sale of securities.
C. Absence of Third-Party Filings. Except such as may have been
filed or registered in favor of Agent as contemplated by subsection 5.16A and to
evidence permitted lease obligations and other Liens permitted pursuant to
subsection 7.2, (i) no effective UCC financing statement, fixture filing or
other instrument similar in effect covering all or any material part of the
Collateral is on file in any filing or recording office and (ii) no effective
filing covering all or any material part of the Intellectual Property Collateral
is on file in the PTO or with any equivalent or similar Governmental Authority.
D. Margin Regulations. The pledge of the Pledged Collateral
pursuant to the Collateral Documents does not violate Regulation T, U or X of
the Board of Governors of the Federal Reserve System.
E. Information Regarding Collateral. All information supplied to
Agent by or on behalf of Borrower or any of its Subsidiaries with respect to any
of the Collateral (in
106
each case taken as a whole with respect to any particular Collateral) is
accurate and complete in all material respects.
5.17 Disclosure.
----------
No representation or warranty of Borrower or any of its Subsidiaries
contained in any Loan Document, any Related Agreement or in any other document,
certificate or written statement furnished to Lenders by or on behalf of
Borrower or any of its Subsidiaries for use in connection with the transactions
contemplated by this Agreement contains any untrue statement of a material fact
or omits to state a material fact (known to Borrower, in the case of any
document not furnished by it) necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances in
which the same were made. Any projections and pro forma financial information
contained in such materials are based upon good faith estimates and assumptions
believed by Borrower to be reasonable at the time made, it being recognized by
Lenders that such projections as to future events are not to be viewed as facts
and that actual results during the period or periods covered by any such
projections may materially differ from the projected results. There are no
facts known (or which could upon the reasonable exercise of diligence,
reasonably be expected to be known) to Borrower (other than matters of a general
economic nature) that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect and that have not been disclosed
herein or in such other documents, certificates and statements furnished to
Lenders for use in connection with the transactions contemplated hereby.
5.18 Representations and Warranties in Related Agreements.
----------------------------------------------------
Borrower has delivered to Lenders complete and correct copies of the
Related Agreements, in each case as in effect as of the Closing Date, and of all
exhibits and schedules thereto. The representations and warranties made by
Borrower and its Subsidiaries contained in the Related Agreements are true,
correct and complete in all material respects on and as of the Closing Date to
the same extent as though made on and as of that date (or, to the extent such
representations and warranties specifically relate to an earlier date, that such
representations and warranties were true, correct and complete in all material
respects on and as of such earlier date) and the Loan Parties have performed in
all material respects all agreements and satisfied all conditions which the
Related Agreements provide shall be performed or satisfied by the Loan Parties
on or before the Closing Date.
5.19 Permits.
-------
Each of the Loan Parties, prior to and after giving effect to the
transactions contemplated by the Loan Documents and the Related Agreements, has
such certificates, permits, licenses (including without limitation trademark and
other Intellectual Property licenses), franchises, consents, approvals,
authorizations and clearances that are material to the condition (financial or
otherwise), business or operations of any Loan Party ("Permits") and is (and
will be immediately after the consummation of such transactions) in compliance
in all respects with all applicable laws as are necessary to own, lease or
operate its properties and to conduct its businesses in the manner as presently
conducted and to be conducted immediately after the consummation of such
transactions, except where failure to be in compliance could not
107
reasonably be expected to result in a Material Adverse Effect; and all such
Permits are valid and in full force and effect and will be valid and in full
force and effect immediately upon consummation of such transactions, except for
those where the failure to be valid or in effect could not reasonably be
expected to result in a Material Adverse Effect. Each of the Loan Parties, prior
to and after giving effect to such transactions, is and will be in compliance in
all respects with its obligations under such Permits, except where failure to be
in compliance could not reasonably be expected to result in a Material Adverse
Effect, and no event has occurred that allows, or after notice or lapse of time
would allow, revocation or termination of such Permits, except where such
revocation or termination could not reasonably be expected to result in a
Material Adverse Effect.
5.20 Matters Relating to Company Bankruptcy Proceedings.
--------------------------------------------------
A. Plan of Reorganization. There have been no material
modifications, amendments revisions or restatements of the Approved Plan of
Reorganization. Any representation and warranty made by Borrower or any Debtor
Subsidiary in the Approved Plan of Reorganization is accurate, true, correct and
complete in all material respects as of the Closing Date (or, to the extent such
representations and warranties specifically relate to an earlier date, that such
representations and warranties were accurate, true, correct and complete in all
material respects as of such earlier date).
B. Confirmation Order. The Confirmation Order is the final order of
the Bankruptcy Court and has been entered by the Bankruptcy Court. All
applicable periods concerning any appeal of the Confirmation Order, as entered
by the Bankruptcy Court, have expired. The Confirmation Order has not been
stayed pending any appeal, and no appeal or petition for review or for rehearing
has been taken or is pending.
SECTION 6. BORROWER'S AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations (other than contingent indemnification obligations) and
the cancellation or expiration of all Letters of Credit, unless Requisite
Lenders shall otherwise give prior written consent, Borrower shall perform, and
shall cause each of its Subsidiaries to perform, all covenants in this Section
6.
6.1 Financial Statements and Other Reports.
--------------------------------------
Borrower will maintain, and cause each of its Subsidiaries to
maintain, a system of accounting established and administered in accordance with
sound business practices to permit preparation of financial statements in
conformity with GAAP. Borrower will deliver to Agent and Lenders:
(i) Events of Default, etc.: promptly upon any officer of
-----------------------
Borrower obtaining knowledge (a) of any condition or event that
constitutes an Event of Default or Potential Event of Default, or
becoming aware that any Lender has given any notice (other than to
Agent) or taken any other action with respect to a claimed Event of
Default or Potential Event of Default, (b) that any Person has
108
given any notice to Borrower or any of its Subsidiaries or taken any
other action with respect to a claimed default or event or condition
of the type referred to in subsection 8.2, or (c) of the occurrence of
any event or change that has caused or evidences, either in any case
or in the aggregate, a Material Adverse Effect, an Officer's
Certificate specifying the nature and period of existence of such
condition, event or change, or specifying the notice given or action
taken by any such Person and the nature of such claimed Event of
Default, Potential Event of Default, default, event or condition, and
what action Borrower has taken, is taking and proposes to take with
respect thereto;
(ii) Monthly and Quarterly Financials: as soon as available and
--------------------------------
in any event within 30 days after the end of each month ending after
the Closing Date and within 45 days after the end of each Fiscal
Quarter (or, with respect to the fourth Fiscal Quarter, 90 days), for
Fiscal Quarters ending after the Closing Date, (a) the consolidated
and consolidating balance sheets of Borrower and its Subsidiaries as
at the end of such fiscal period and the related consolidated and
consolidating statements of income, stockholders' equity and cash
flows of Borrower and its Subsidiaries for such fiscal period and for
the period from the beginning of the then current Fiscal Year to the
end of such fiscal period, setting forth in each case in comparative
form the corresponding figures for the corresponding periods of the
previous Fiscal Year and the corresponding figures from the Financial
Plan for the current Fiscal Year, to the extent prepared for such
fiscal period, all in reasonable detail and certified by the chief
financial officer or the chief accounting officer of Borrower that
they fairly present, in all material respects, the financial condition
of Borrower and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods
indicated, subject to changes resulting from audit and normal year-end
adjustments, provided that with respect to the delivery of such
quarterly financial statements, Borrower may satisfy such requirements
by the delivery of its Quarterly Report on Form 10-Q, and (b) a
narrative report describing the operations of Borrower and its
Subsidiaries in the form prepared for presentation to senior
management for such fiscal period and for the period from the
beginning of the then current Fiscal Year to the end of such fiscal
period;
(iii) Year-End Financials: as soon as available and in any
-------------------
event within 90 days after the end of each Fiscal Year, (a) the
consolidated and consolidating balance sheets of Borrower and its
Subsidiaries as at the end of such Fiscal Year and the related
consolidated and consolidating statements of income, stockholders'
equity and cash flows of Borrower and its Subsidiaries for such Fiscal
Year, setting forth in each case in comparative form the corresponding
figures for the previous Fiscal Year and the corresponding figures
from the Financial Plan for the Fiscal Year covered by such financial
statements, all in reasonable detail and certified by the chief
financial officer or the chief accounting officer of Borrower that
they fairly present, in all material respects, the financial condition
of Borrower and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods
indicated, provided that with respect to the delivery of such annual
financial statements,
109
Borrower may satisfy such requirements by the delivery of its Annual
Report on Form 10-K produce the material described in this clause (a),
(b) a narrative report describing the operations of Borrower and its
Subsidiaries in the form prepared for presentation to senior
management for such Fiscal Year, and (c) in the case of such
consolidated financial statements, a report thereon of
PricewaterhouseCoopers LLP or other independent certified public
accountants of recognized national standing selected by Borrower and
satisfactory to Agent, which report shall be unqualified about the
ability of Borrower and its Subsidiaries to continue as a going
concern and the scope thereof, and shall state that such consolidated
financial statements fairly present, in all material respects, the
consolidated financial position of Borrower and its Subsidiaries as at
the dates indicated and the results of their operations and their cash
flows for the periods indicated in conformity with GAAP applied on a
basis consistent with prior years (except as otherwise disclosed in
such financial statements) and that the examination by such
accountants in connection with such consolidated financial statements
has been made in accordance with generally accepted auditing
standards;
(iv) Pricing and Compliance Certificates: together with each
-----------------------------------
delivery of quarterly and annual financial statements of Borrower and
its Subsidiaries pursuant to subdivisions (ii) and (iii) above, (a) an
Officer's Certificate of Borrower stating that the signers have
reviewed the terms of this Agreement and have made, or caused to be
made under their supervision, a review in reasonable detail of the
transactions and condition of Borrower and its Subsidiaries during the
accounting period covered by such financial statements and that such
review has not disclosed the existence during or at the end of such
accounting period, and that the signers do not have knowledge of the
existence as at the date of such Officer's Certificate, of any
condition or event that constitutes an Event of Default or Potential
Event of Default, or, if any such condition or event existed or
exists, specifying the nature and period of existence thereof and what
action Borrower has taken, is taking and proposes to take with respect
thereto; and (b) a Compliance Certificate demonstrating in reasonable
detail compliance during and at the end of the applicable accounting
periods with the restrictions contained in Section 7; in addition, on
or before the 45th day following the end of each Fiscal Quarter, a
Pricing Certificate demonstrating in reasonable detail the calculation
of the Consolidated Leverage Ratio as of the end of the four Fiscal
Quarter period then ended;
(v) Reconciliation Statements: if, as a result of any change in
-------------------------
accounting principles and policies from those used in the preparation
of the audited financial statements referred to in subsection 5.3, the
consolidated financial statements of Borrower and its Subsidiaries
delivered pursuant to subdivisions (ii), (iii) or (xii) of this
subsection 6.1 will differ in any material respect from the
consolidated financial statements that would have been delivered
pursuant to such subdivisions had no such change in accounting
principles and policies been made, then (a) together with the first
delivery of financial statements pursuant to subdivision (ii), (iii)
or (xii) of this subsection 6.1 following such
110
change, consolidated financial statements of Borrower and its
Subsidiaries for (y) the current Fiscal Year to the effective date of
such change and (z) the two full Fiscal Years immediately preceding
the Fiscal Year in which such change is made, in each case prepared on
a pro forma basis as if such change had been in effect during such
periods, and (b) together with each delivery of financial statements
pursuant to subdivision (ii), (iii) or (xii) of this subsection 6.1
following such change, if required pursuant to subsection 1.2, a
written statement of the chief accounting officer or chief financial
officer of Borrower setting forth the differences (including any
differences that would affect any calculations relating to the
financial covenants set forth in subsection 7.6) which would have
resulted if such financial statements had been prepared without giving
effect to such change;
(vi) Accountants' Certification: together with each delivery of
--------------------------
consolidated financial statements of Borrower and its Subsidiaries
pursuant to subdivision (iii) above, a written statement by the
independent certified public accountants giving the report thereon (a)
stating that their audit examination has included a review of the
terms of this Agreement and the other Loan Documents as they relate to
accounting matters, (b) stating whether, in connection with their
audit examination, any condition or event that constitutes an Event of
Default or Potential Event of Default has come to their attention and,
if such a condition or event has come to their attention, specifying
the nature and period of existence thereof; provided that such
accountants shall not be liable by reason of any failure to obtain
knowledge of any such Event of Default or Potential Event of Default
that would not be disclosed in the course of their audit examination,
and (c) stating that based on their audit examination nothing has come
to their attention that causes them to believe either or both that the
information contained in the certificates delivered therewith pursuant
to subdivision (iv) above is not correct or that the matters set forth
in the Compliance Certificates delivered therewith pursuant to clause
(b) of subdivision (iv) above for the applicable Fiscal Year are not
stated in accordance with the terms of this Agreement;
(vii) Accountants' Reports: promptly upon receipt thereof
--------------------
(unless restricted by applicable professional standards), copies of
all reports submitted to Borrower by independent certified public
accountants in connection with each annual, interim or special audit
of the financial statements of Borrower and its Subsidiaries made by
such accountants, including any comment letter submitted by such
accountants to management in connection with their annual audit;
(viii) SEC Filings and Press Releases: promptly upon their
------------------------------
becoming available, copies of (a) all financial statements, reports,
notices and proxy statements sent or made available generally by
Borrower to its security holders or by any Subsidiary of Borrower to
its security holders other than Borrower or another Subsidiary of
Borrower, (b) all regular and periodic reports and all registration
statements (other than on Form S-8 or a similar form) and
prospectuses, if any, filed by Borrower or any of its Subsidiaries
with any securities exchange or with the Securities and Exchange
Commission or any
111
governmental or private regulatory authority, and (c) all press
releases and other statements made available generally by Borrower or
any of its Subsidiaries to the public concerning material developments
in the business of Borrower and its Subsidiaries taken as a whole;
(ix) Litigation or Other Proceedings: (a) promptly upon any
-------------------------------
Officer of Borrower obtaining knowledge of (X) the institution of, or
non-frivolous threat of, any Proceeding against or affecting Borrower
or any of its Subsidiaries or any property of Borrower or any of its
Subsidiaries not previously disclosed in writing by Borrower to
Lenders or (Y) any material development in any Proceeding that, in any
case:
(1) if adversely determined, has a reasonable possibility
after giving effect to the coverage and policy limits of
insurance policies issued to Borrower and its Subsidiaries of
giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the consummation
of, or to recover any damages or obtain relief as a result of,
the transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to Borrower to enable Lenders and their counsel
to evaluate such matters; and (b) within twenty days after the end of
each Fiscal Quarter, a schedule of all Proceedings involving an
alleged liability of, or claims against or affecting, Borrower or any
of its Subsidiaries equal to or greater than $5,000,000, and promptly
after request by Agent such other information as may be reasonably
requested by Agent to enable Agent and its counsel to evaluate any of
such Proceedings;
(x) ERISA Events: promptly upon becoming aware of the
------------
occurrence of or forthcoming occurrence of any ERISA Event, a written
notice specifying the nature thereof, what action Borrower, any of its
Subsidiaries or any of their respective ERISA Affiliates has taken, is
taking or proposes to take with respect thereto and, when known, any
action taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto;
(xi) ERISA Notices: with reasonable promptness, copies of (a)
-------------
all notices received by Borrower, any of its Subsidiaries or any of
their respective ERISA Affiliates from a Multiemployer Plan sponsor
concerning an ERISA Event; and (b) copies of such other documents or
governmental reports or filings relating to any Employee Benefit Plan
as Agent shall reasonably request;
(xii) Financial Plans: as soon as practicable and in any event no
---------------
later than 30 days prior to the beginning of each Fiscal Year, a
consolidated and consolidating plan and financial forecast for such
Fiscal Year and the next four succeeding Fiscal Years (the "Financial
Plan" for such Fiscal Years), including
112
(a) forecasted consolidated and consolidating balance sheets and
forecasted consolidated and consolidating statements of income and
cash flows of Borrower and its Subsidiaries for each such Fiscal Year,
together with pro forma Compliance Certificates for each such Fiscal
--- -----
Year and an explanation of the assumptions on which such forecasts are
based, (b) forecasted consolidated and consolidating statements of
income and cash flows of Borrower and its Subsidiaries for each month
of the first such Fiscal Year, together with an explanation of the
assumptions on which such forecasts are based, (c) the amount of
forecasted unallocated overhead for each such Fiscal Year, and (d)
such other information and projections as any Lender may reasonably
request;
(xiii) Governing Body: with reasonable promptness, written
--------------
notice of any change in the Governing Body of Borrower or any of its
Subsidiaries;
(xiv) Insurance: as soon as practicable and in any event by the
---------
last day of each Fiscal Year, a report in form and substance
satisfactory to Agent outlining all material insurance coverage
maintained as of the date of such report by Borrower and its
Subsidiaries and all material insurance coverage planned to be
maintained by Borrower and its Subsidiaries in the immediately
succeeding Fiscal Year and confirming the status of Agent as
additional insured and/or loss payee under all such insurance to the
extent required by subsection 6.4;
(xv) Environmental Audits and Reports: as soon as practicable
--------------------------------
following receipt thereof, copies of all environmental audits and
reports, whether prepared by personnel of Borrower or any of its
Subsidiaries or by independent consultants, with respect to
significant environmental matters at any Facility or which relate to
an Environmental Claim in either case which could reasonably be
expected to result in a Material Adverse Effect;
(xvi) New Subsidiaries: promptly upon any Person becoming a
----------------
Subsidiary of Borrower or any Subsidiary of Borrower or any Subsidiary
of Borrower or any of its Subsidiaries becoming an Immaterial
Subsidiary of such Person, a written notice setting forth with respect
to such Person (a) the date on which such Person became a Subsidiary
or Immaterial Subsidiary of Borrower or such Subsidiary of Borrower
and (b) all of the data required to be set forth in Schedule 5.1
------------
annexed hereto with respect to all Subsidiaries of Borrower (it being
understood that such written notice shall be deemed to supplement
Schedule 5.1 annexed hereto for all purposes of this Agreement);
------------
(xvii) Material Contracts: promptly, and in any event within 10
------------------
Business Days after any Material Contract of Borrower or any of its
Subsidiaries is terminated or amended in a manner that is materially
adverse to Borrower and its Subsidiaries taken as a whole, a written
notice disclosing such termination or amendment;
(xviii) Borrowing Base Certificates; Static Reserve: as soon as
-------------------------------------------
available and in any event within ten (10) Business Days after the
last Business Day of each
113
month ending after the Closing Date, a Borrowing Base Certificate
dated as of the last Business Day of such month and certified by the
chief financial officer or the chief accounting officer of Borrower to
be true and correct in all material respects, including without
limitation a report on cash held in the Deposit Accounts of the
Foreign Loan Parties and a report on any outstandings by the
Australian Loan Parties in excess of the amount of Indebtedness on
which any required stamp tax has been paid, together with any
additional schedules and other information as Agent may reasonably
request (it being understood that (a) Borrower, in addition to such
monthly Borrowing Base Certificates, may from time to time deliver to
Agent and Lenders on any Business Day after the Closing Date a
Borrowing Base Certificate dated as of such Business Day, together
with any additional schedules and other information as Agent may
reasonably request), and (b) the most recent Borrowing Base
Certificate described in this clause (xviii) that is delivered to
Agent shall be used in calculating the Borrowing Base as of any date
of determination); and, within five (5) Business Days of any Officer
of Borrower obtaining knowledge of the same, a written notice
disclosing any material change in the Static Reserve then in effect;
and
(xix) Other Information: with reasonable promptness, such other
-----------------
information and data with respect to Borrower or any of its
Subsidiaries as from time to time may be reasonably requested by any
Lender.
6.2 Existence, etc.
--------------
Except as permitted under subsection 7.7, Borrower will, and will
cause each of its Subsidiaries to, at all times preserve and keep in full force
and effect its existence and all rights and franchises material to its business;
provided, however, that neither Borrower nor any of its Subsidiaries shall be
required to preserve any such right or franchise if the Governing Body of
Borrower or such Subsidiary shall determine that the preservation thereof is no
longer desirable in the conduct of the business of Borrower or such Subsidiary,
as the case may be, and that the loss thereof is not disadvantageous in any
material respect to Borrower, such Subsidiary or Lenders.
6.3 Payment of Taxes and Claims; Tax.
--------------------------------
A. Borrower will, and will cause each of its Subsidiaries to, pay
all material taxes, assessments and other governmental charges imposed upon it
or any of its properties or assets or in respect of any of its income,
businesses or franchises before any penalty accrues thereon, and all claims
(including claims for labor, services, materials and supplies) for sums that
have become due and payable and that by law have or may become a Lien upon any
of its properties or assets, prior to the time when any penalty or fine shall be
incurred with respect thereto; provided that no such charge or claim need be
paid if it is being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, so long as (1) such reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor and (2) in the case of a charge or claim which has
or may become a Lien against any of the Collateral, such proceedings
conclusively operate to stay the sale of any portion of the Collateral to
satisfy such charge or claim.
114
B. Borrower will not, nor will it permit any of its Subsidiaries to,
file or consent to the filing of any consolidated income tax return with any
Person (other than Borrower or any of its Subsidiaries).
6.4 Maintenance of Properties; Insurance; Application of Net Insurance/
-------------------------------------------------------------------
Condemnation Proceeds.
---------------------
A. Maintenance of Properties. Borrower will, and will cause each of
its Subsidiaries to, maintain or cause to be maintained in good repair, working
order and condition, ordinary wear and tear excepted, all material properties
used or useful in the business of Borrower and its Subsidiaries (including all
Intellectual Property) and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof.
B. Insurance. Borrower will maintain or cause to be maintained, with
financially sound and reputable insurers, such public liability insurance, third
party property damage and bodily injury, and first party property damage
including business interruption insurance and casualty insurance with respect to
liabilities, losses or damage in respect of the assets, properties and
businesses of Borrower and its Subsidiaries as may customarily be carried or
maintained under similar circumstances by Persons of established reputation
engaged in similar businesses, in each case in such amounts (giving effect to
self-insurance), with such deductibles, covering such risks and otherwise on
such terms and conditions as shall be customary for corporations similarly
situated in the industry. Without limiting the generality of the foregoing,
Borrower will maintain or cause to be maintained (i) flood insurance with
respect to each Flood Hazard Property that is located in a community that
participates in the National Flood Insurance Program, in each case in compliance
with any applicable regulations of the Board of Governors of the Federal Reserve
System, and (ii) replacement value casualty insurance on the Collateral under
such policies of insurance, with such insurance companies, in such amounts, with
such deductibles, and covering such risks as are at all times satisfactory to
Agent in its commercially reasonable judgment. Each such policy of insurance
shall (a) name Agent for the benefit of Lenders as an additional insured
thereunder as its interests may appear and (b) in the case of each business
interruption and casualty insurance policy, contain a loss payable clause or
endorsement, satisfactory in form and substance to Agent, that names Agent for
the benefit of Lenders as the loss payee thereunder for any covered loss in
excess of $50,000 and provides for at least 30 days prior written notice to
Agent of any modification or cancellation of such policy.
C. Application of Net Insurance/Condemnation Proceeds.
(i) Business Interruption Insurance. Upon receipt by Borrower or
-------------------------------
any of its Subsidiaries of any business interruption insurance
proceeds constituting Net Insurance/Condemnation Proceeds, (a) so long
as no Event of Default or Potential Event of Default shall have
occurred and be continuing, Borrower or such Subsidiary may retain and
apply such Net Insurance/Condemnation Proceeds for working capital
purposes, and (b) if an Event of Default or Potential Event of Default
shall have occurred and be continuing, Borrower shall apply an amount
equal to such Net Insurance/Condemnation Proceeds to prepay the Loans
(and/or
115
the Revolving Loan Commitments shall be reduced) as provided
in subsection 2.4B;
(ii) Casualty Insurance/Condemnation Proceeds. Upon receipt by
----------------------------------------
Borrower or any of its Subsidiaries of any Net Insurance/Condemnation
Proceeds other than from business interruption insurance, (a) so long
as no Event of Default shall have occurred and be continuing, Borrower
shall, or shall cause one or more of its Subsidiaries to, promptly and
diligently apply such Net Insurance/Condemnation Proceeds to pay or
reimburse the costs of repairing, restoring or replacing the assets in
respect of which such Net Insurance/Condemnation Proceeds were
received or, to the extent not so applied, to prepay the Loans (and/or
the Revolving Loan Commitments shall be reduced) as provided in
subsection 2.4B, and (b) if an Event of Default shall have occurred
and be continuing, Borrower shall apply an amount equal to such Net
Insurance/Condemnation Proceeds to prepay the Loans (and/or the
Revolving Loan Commitments shall be reduced) as provided in subsection
2.4B.
(iii) Net Insurance/Condemnation Proceeds Received by Agent.
-----------------------------------------------------
Upon receipt by Agent of any Net Insurance/Condemnation Proceeds as
loss payee, (a) if and to the extent Borrower would have been required
to apply such Net Insurance/Condemnation Proceeds (if it had received
them directly) to prepay the Loans and/or reduce the Revolving Loan
Commitments, Agent shall, and Borrower hereby authorizes Agent to,
apply such Net Insurance/Condemnation Proceeds to prepay the Loans
(and/or the Revolving Loan Commitments shall be reduced) as provided
in subsection 2.4B, and (b) to the extent the foregoing clause (a)
does not apply and (1) the aggregate amount of such Net
Insurance/Condemnation Proceeds received (and reasonably expected to
be received) by Agent in respect of any covered loss does not exceed
$250,000, Agent shall deliver such Net Insurance/Condemnation Proceeds
to Borrower, and Borrower shall, or shall cause one or more of its
Subsidiaries to, promptly apply such Net Insurance/Condemnation
Proceeds to the costs of repairing, restoring, or replacing the assets
in respect of which such Net Insurance/Condemnation Proceeds were
received, and (2) if the aggregate amount of Net
Insurance/Condemnation Proceeds received (and reasonably expected to
be received) by Agent in respect of any covered loss exceeds $250,000,
Agent shall hold such Net Insurance/Condemnation Proceeds pursuant to
the terms of the Security Agreement and, so long as Borrower or any of
its Subsidiaries proceeds diligently to repair, restore or replace the
assets of Borrower or such Subsidiary in respect of which such Net
Insurance/Condemnation Proceeds were received, Agent shall from time
to time disburse to Borrower or such Subsidiary from the Collateral
Account, to the extent of any such Net Insurance/Condemnation Proceeds
remaining therein in respect of the applicable covered loss, amounts
necessary to pay the cost of such repair, restoration or replacement
after the receipt by Agent of invoices or other documentation
reasonably satisfactory to Agent relating to the amount of costs so
incurred and the work performed (including, if required by Agent, lien
releases and architects' certificates); provided, however that if at
any time Agent reasonably determines (A) that
116
Borrower or such Subsidiary is not proceeding diligently with such
repair, restoration or replacement or (B) that such repair,
restoration or replacement cannot be completed with the Net
Insurance/Condemnation Proceeds then held by Agent for such purpose,
together with funds otherwise available to Borrower for such purpose,
Agent shall, and Borrower hereby authorizes Agent to, apply such Net
Insurance/ Condemnation Proceeds to prepay the Loans (and/or the
Revolving Loan Commitments shall be reduced) as provided in subsection
2.4B.
6.5 Inspection; Lender Meeting; UK Restructuring Presentation.
---------------------------------------------------------
Borrower shall, and shall cause each of its Subsidiaries to, permit
(i) from time to time, which may be quarterly (or more often if desired by Agent
during the continuance of an Event of Default or Potential Event of Default)
unless Agent decides to the contrary, any authorized representatives designated
by any Lender to visit, inspect and audit any of the properties of Borrower or
any of its Subsidiaries, including its and their financial and accounting books
and records, and to make copies and take extracts therefrom, and to discuss its
and their affairs, finances and accounts with its and their officers and
independent public accountants (provided that representatives of Borrower may,
if they so choose, be present at or participate in any such discussion), and
(ii) any authorized representatives designated by Agent to conduct at least two
audits or appraisals of all Inventory, Accounts, machinery and equipment, Real
Property Asset or Intellectual Property of Loan Parties during each twelve-month
period after the Closing Date (exclusive of the audits and appraisals to in
subsection 4.1O (collectively, the "Base Audit")), each such audit or appraisal
to be substantially similar in scope and substance to the Base Audit, all upon
reasonable notice and at such reasonable times during normal business hours.
Without in any way limiting the foregoing, Borrower will, upon the request of
Agent or Requisite Lenders, participate in a meeting of Agent and Lenders once
during each Fiscal Year to be held at Borrower's corporate offices (or such
other location as may be agreed to by Borrower and Agent) at such time as may be
agreed to by Borrower and Agent. As a condition to Borrower requesting Agent's
consent to the UK Restructuring, and prior to the implementation of any
transaction included in the UK Restructuring, appropriate Officers of Borrower
will make a presentation to Agent concerning all material provisions and details
of the UK Restructuring, shall provide such other information to Agent
concerning the UK Restructuring as Agent may reasonably request and shall
provide responses to any questions concerning the UK Restructuring that Agent
may submit.
6.6 Compliance with Laws, etc.
--------------------------
Borrower shall, and shall cause each of its Subsidiaries and all other
Persons on or occupying any Facilities to, comply with the requirements of all
applicable laws, rules, regulations and orders of any Government Authority
(including all Environmental Laws), noncompliance with which could reasonably be
expected to result in, individually or in the aggregate, a Material Adverse
Effect.
6.7 Environmental Disclosure and Inspection.
---------------------------------------
A. Borrower shall, and shall cause each of its Subsidiaries to,
exercise all due diligence in order to comply in all material respects and cause
(i) all tenants under any leases or
117
occupancy agreements affecting any portion of the Facilities and (ii) all other
Persons on or occupying such property, to comply in all material respects with
all Environmental Laws.
B. Borrower agrees that Agent may, from time to time and in its
reasonable discretion, retain, at Borrower's expense, an independent
professional consultant to review any report relating to Hazardous Materials
prepared by or for Borrower or any of its Subsidiaries and, upon a reasonable
belief that Borrower has breached any covenant or representation herein with
respect to environmental matters or that there has been a material violation of
Environmental Laws at any Facility or by Borrower or any of its Subsidiaries, to
conduct its own reasonable investigation of such matter at any Facility
currently owned, leased, operated or used by Borrower or any of its
Subsidiaries, and Borrower agrees to use its best efforts to obtain permission
for Agent's professional consultant to conduct its own investigation of any such
matter at any Facility previously owned, leased, operated or used by Borrower or
any of its Subsidiaries. Borrower hereby grants to Agent and its agents,
employees, consultants and contractors the right to enter into or on to the
Facilities currently owned, leased, operated or used by Borrower or any of its
Subsidiaries upon reasonable notice to Borrower to perform such assessments on
such property as are reasonably necessary to conduct such a review and/or
investigation. Any such investigation of any Facility shall be conducted,
unless otherwise agreed to by Borrower and Agent, during normal business hours
and, to the extent reasonably practicable, shall be conducted so as not to
interfere with the ongoing operations at any such Facility or to cause any
damage or loss to any property at such Facility. Borrower and Agent hereby
acknowledge and agree that any report of any investigation conducted at the
request of Agent pursuant to this subsection 6.7B will be obtained and shall be
used by Agent and Lenders for the purposes of Lenders' internal credit
decisions, to monitor and police the Loans and to protect Lenders' security
interests, if any, created by the Loan Documents.
C. Borrower shall promptly advise Lenders in writing and in
reasonable detail of (i) any material Release of any Hazardous Materials
required to be reported to any federal, state or local Government Authority or
regulatory agency under any applicable Environmental Laws, (ii) any and all
written communications with respect to any Environmental Claims that have a
reasonable possibility of giving rise to a Material Adverse Effect or with
respect to any material Release of Hazardous Materials required to be reported
to any federal, state or local governmental or regulatory agency, (iii) any
remedial action taken by Borrower, any Subsidiary of Borrower or any other
Person in response to (x) any Hazardous Materials on, under or about any
Facility, the existence of which has a reasonable possibility of resulting in an
Environmental Claim having a Material Adverse Effect, or (y) any Environmental
Claim that could have a Material Adverse Effect, and (iv) Borrower's discovery
of any occurrence or condition on any real property adjoining or in the vicinity
of any Facility that could cause such Facility or any part thereof to be subject
to any material restrictions on the ownership, occupancy, transferability or use
thereof under any Environmental Laws.
D. Borrower shall promptly notify Lenders of (i) any proposed
acquisition of stock, assets, or property by Borrower or any of its Subsidiaries
that could reasonably be expected to expose Borrower or any of its Subsidiaries
to, or result in, Environmental Claims that could reasonably be expected to have
a Material Adverse Effect and (ii) any proposed action to be taken by Borrower
or any of its Subsidiaries to modify current operations that could
118
reasonably be expected to subject Borrower or any of its Subsidiaries to
material additional obligations or requirements under Environmental Laws.
E. Borrower shall, at its own expense, provide copies of such
documents or information as Agent may reasonably request in relation to any
matters disclosed pursuant to this subsection 6.7.
6.8 Borrower's Remedial Action Regarding Hazardous Materials.
--------------------------------------------------------
Borrower shall promptly take, and shall cause each of its Subsidiaries
promptly to take, any and all remedial action in connection with the presence,
storage, use, disposal, transportation or Release of any Hazardous Materials on,
under or about any Facility in order to comply in all material respects with all
applicable Environmental Laws and Governmental Authorizations. In the event
Borrower or any of its Subsidiaries undertakes any remedial action with respect
to any Hazardous Materials on, under or about any Facility, Borrower or such
Subsidiary shall conduct and complete such remedial action in compliance in all
material respects with all applicable Environmental Laws, and in accordance in
all material respects with the policies, orders and directives of all federal,
state and local governmental authorities except when, and only to the extent
that, Borrower's or such Subsidiary's liability for such presence, storage, use,
disposal, transportation or discharge of any Hazardous Materials is being
contested in good faith by Borrower or such Subsidiary.
6.9 Execution of Loan Documents and Personal Property Collateral Documents
----------------------------------------------------------------------
and Registration of Certain Collateral After the Closing Date.
-------------------------------------------------------------
A. Execution of Loan Documents and Personal Property Collateral
Documents. In the event it is determined that any Domestic Subsidiary of
Borrower (other than an Immaterial Subsidiary) existing on the Closing Date has
not previously executed the Guaranty, or in the event that any Person becomes a
Domestic Subsidiary of Borrower (other than an Immaterial Subsidiary) after the
Closing Date, Borrower will promptly notify Agent of that fact and cause such
Subsidiary to execute and deliver to Agent a counterpart of the Guaranty and
Security Agreement, and, in either case, to take all such further actions and
execute all such further documents and instruments (including actions, documents
and instruments comparable to those described in subsection 4.1L) as may be
necessary or, in the opinion of Agent, desirable to create in favor of Agent,
for the benefit of Lenders, a valid and perfected First Priority Lien on
substantially all of the personal and mixed property assets of such Domestic
Subsidiary described in the applicable forms of Loan Documents and Collateral
Documents.
B. Foreign Subsidiaries. (1) Within ninety (90) days of the Closing
Date, or such longer period of time as may be approved by Agent, with respect to
lack of the first tier Foreign Subsidiaries designated as a pledged Foreign
Subsidiary in Schedule 5.1, and within ninety (90) days after Agent's reasonable
------------
request with respect to any other first tier Foreign Subsidiary (other than an
Immaterial Subsidiary) existing as of the Closing Date, and (2) in the event
that any Person becomes first tier Foreign Subsidiary (other than an Immaterial
Subsidiary) after the Closing Date, Borrower will promptly notify Agent of that
fact and, in each case Borrower shall, or shall cause any Domestic Subsidiary
which is the direct parent of such Foreign Subsidiary to, execute and deliver to
Agent such documents and instruments and take
119
such further actions (including actions, documents and instruments comparable to
those described in subsection 4.1L) as may be necessary, or in the reasonable
opinion of Agent, desirable to create in favor of Agent, for the benefit of
Lenders, a valid and perfected First Priority Lien on 66% of the capital stock
of such Foreign Subsidiary. At any time that the pledge of the additional 34%
(or such other portion) of the capital stock of any first tier Foreign
Subsidiary of Borrower or any Domestic Subsidiary of Borrower would not result
in the possibility of a deemed dividend under Section 956 of the Internal
Revenue Code, Borrower or Domestic Subsidiary shall cause such capital stock to
be pledged to, and subject to a First Priority Lien in favor of, Agent for the
benefit of Lenders as further security for the performance of the Obligations
hereunder, all pursuant to such Collateral Documents as may be acceptable in
form and substance to Agent.
C. Subsidiaries of Foreign Loan Parties. In the event that any
Person becomes a Foreign Loan Party or a Subsidiary of a Foreign Loan Party
(other than an Immaterial Subsidiary) after the Closing Date, Borrower will
promptly notify Agent of that fact and cause such Foreign Loan Party or
Subsidiary to execute and deliver to Borrower counterparts of, or such
additional, Intercompany Notes, Intercompany Note Guaranties and Intercompany
Collateral Documents, and to take all such further actions and execute all such
further documents and instruments (including actions, documents and instruments
comparable to those described in subsection 4.1L) as may be necessary or, in the
opinion of Agent, desirable to create in favor of Agent, for the benefit of
Lenders, a valid and perfected First Priority Lien on all of the personal and
mixed property assets of such Foreign Loan Party or such Subsidiary of such
Foreign Loan Party.
D. Subsidiary Organizational Documents, Legal Opinions, Etc.
Borrower shall deliver to Agent, together with such Loan Documents delivered
pursuant to this subsection 6.9, (i) certified copies of such Subsidiary's
Organizational Documents, together with, if such Subsidiary is a Domestic
Subsidiary, a good standing certificate from the Secretary of State of the
jurisdiction of its organization and each other state in which such Person is
qualified to do business and, to the extent generally available, a certificate
or other evidence of good standing as to payment of any applicable franchise or
similar taxes from the appropriate taxing authority of each of such
jurisdictions, each to be dated a recent date prior to their delivery to Agent,
(ii) a certificate executed by the secretary or similar officer of such
Subsidiary as to (a) the fact that the attached resolutions of the Governing
Body of such Subsidiary approving and authorizing the execution, delivery and
performance of such Loan Documents are in full force and effect and have not
been modified or amended and (b) the incumbency and signatures of the officers
of such Subsidiary executing such Loan Documents, and (iii) a favorable opinion
of counsel to such Subsidiary, in form and substance satisfactory to Agent and
its counsel, as to (a) the due organization and good standing of such
Subsidiary, (b) the due authorization, execution and delivery by such Subsidiary
of such Loan Documents, (c) the enforceability of such Loan Documents against
such Subsidiary and (d) such other matters (including matters relating to the
creation and perfection of Liens in any Collateral pursuant to such Loan
Documents) as Agent may reasonably request, all of the foregoing to be
satisfactory in form and substance to Agent and its counsel.
E. Registration of Certain Intellectual Property Collateral, Etc.
Within 75 days after the Closing Date, Borrower shall cause certain Intellectual
Property used in the
120
operation of the business of Borrower's United Kingdom Subsidiaries, as
identified by Agent, to be properly registered in the name of Joy Mining
Machinery Ltd., and all necessary or desirable filings and registrations to be
duly made in connection therewith. Borrower shall notify Agent upon the
completion of such registrations and thereafter shall promptly take such action
and execute such Collateral Documents (including actions, documents and
instruments comparable to those described in subsection 4.1L) as may be
necessary, or in the reasonable opinion of Agent, desirable to create or
continue in favor of Agent, for the benefit of Lenders, a valid and perfected
First Priority Lien in such Intellectual Property.
6.10 Matters Relating to Additional Real Property Collateral;
--------------------------------------------------------
Headquarters Sale.
-----------------
A. Conforming Leasehold Interests. To the extent Borrower shall
not have delivered to Agent a fully executed and notarized Mortgage on the
Closing Date with respect to any Leasehold Property designated as a Closing Date
Mortgaged Property, Borrower shall continue to use its best efforts to obtain a
Mortgage on such Leasehold Property. If Borrower or any of its Subsidiaries
acquires any Leasehold Property (unless otherwise permitted by Agent in its
reasonable discretion), Borrower shall, or shall cause such Subsidiary to, cause
such Leasehold Property to be a Conforming Leasehold Interest.
B. Additional Mortgages, Etc. From and after the Closing Date, in
the event that (i) any Loan Party acquires any fee or freehold interest in real
property or any Leasehold Property with a fair market value in excess of
$1,000,000 (unless otherwise permitted by Agent in its reasonable discretion) or
(ii) at the time any Person becomes a Loan Party, such Person owns or holds any
fee or freehold interest in real property or any Leasehold Property with a fair
market value in excess of $1,000,000, in the case of clause (ii) above,
excluding any such Real Property Asset the encumbrancing of which requires the
consent of any applicable lessor or then-existing senior lienholder, where
Borrower and its Subsidiaries are unable to obtain such lessor's or senior
lienholder's consent (any such non-excluded Real Property Asset described in the
foregoing clause (i) or (ii) being an "Additional Mortgaged Property"), such
Loan Party shall deliver to Agent, as soon as practicable after such Person
acquires such Additional Mortgaged Property or becomes a Loan Party, as the case
may be, a fully executed and notarized Mortgage (an "Additional Mortgage"), duly
recorded in all appropriate places in all applicable jurisdictions, encumbering
the interest of such Loan Party in such Additional Mortgaged Property; and such
opinions, appraisal, documents, title insurance, environmental reports that
would have been delivered on the Closing Date if such Additional Mortgaged
Property were a Closing Date Mortgaged Property or that may be reasonably
required by Agent.
C. Real Estate Appraisals. Borrower shall, and shall cause each of
its Subsidiaries to, permit an independent real estate appraiser satisfactory to
Agent, upon reasonable notice, to visit and inspect any Additional Mortgaged
Property for the purpose of preparing an appraisal of such Additional Mortgaged
Property satisfying the requirements of any applicable laws and regulations (in
each case to the extent required under such laws and regulations as determined
by Agent in its discretion).
D. Headquarters Sale. In the event that the Headquarters Sale has
not closed and the proceeds therefrom shall not have been received by Borrower
or a Subsidiary of Borrower within six (6) months after the Closing Date, the
Real Property Asset described in the
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definition of "Headquarters Sale" in subsection 1.1 of this Agreement shall be
deemed to be an Additional Mortgaged Property and shall be subject to the
provisions of subsection 6.10B hereof.
E. Longwall Properties. Within 30 days of the Closing Date, Joy
Technologies, Inc. shall have encumbered the real properties transferred to it
by American Longwall Face Conveyors, Inc. and American Longwall Roof Supports,
Inc. in favor of Agent as Additional Mortgaged Properties hereunder and such
properties shall be subject to the provisions of subsection 6.10B hereof.
6.11 Revised UCC Article 9. With respect to any jurisdiction in
---------------------
which Revised Article 9 of the UCC is not in effect as of the Closing Date,
promptly after the effective date of Revised Article 9 in each applicable
jurisdiction the Loan Parties shall deliver to Agent opinions of counsel (which
opinions shall be reasonably satisfactory in form and substance to Agent) in
such jurisdictions to the effect that, after the respective effective date of
Revised Article 9, the security interests of Agent securing the Obligations of
the Loan Parties hereunder and under the other Loan Documents are perfected
security interests under applicable law.
Section 7. BORROWER'S NEGATIVE COVENANTS
Borrower covenants and agrees that, so long as any of the
Commitments hereunder shall remain in effect and until payment in full of all of
the Loans and other Obligations (other than contingent indemnification
obligations) and the cancellation or expiration of all Letters of Credit, unless
Requisite Lenders shall otherwise give prior written consent, Borrower shall
perform, and shall cause each of its Subsidiaries to perform, all covenants in
this Section 7.
7.1 Indebtedness.
------------
Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or guaranty, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(i) Borrower may become and remain liable with respect to
the Obligations;
(ii) Borrower and its Subsidiaries may become and remain
liable with respect to Contingent Obligations permitted by subsection
7.4 and, upon any matured obligations actually arising pursuant
thereto, the Indebtedness corresponding to the Contingent Obligations
so extinguished;
(iii) Borrower and its Subsidiaries may become and remain
liable with respect to Indebtedness in respect of Capital Leases;
provided that such Capital Leases are permitted under the terms of
--------
subsection 7.9;
(iv) (A) Borrower and any Guarantor may become and remain
liable with respect to Indebtedness to Borrower and any Guarantor; (B)
any Foreign Loan Party may become and remain liable with respect to
any Indebtedness to any other Foreign Loan Party; (C) Subsidiaries of
Borrower which are not Guarantors
122
or Foreign Loan Parties may become and remain liable with respect to
Indebtedness to Borrower, a Guarantor or a Foreign Loan Party in an
aggregate amount, which together with the aggregate Investments made
by Borrower, Guarantors and Foreign Loan Parties pursuant to
subsection 7.3(vii), does not exceed $4,000,000; (D) Subsidiaries of
Borrower which are not Guarantors or Foreign Loan Parties may become
and remain liable with respect to Indebtedness to other Subsidiaries
of Borrower which are not Guarantors or Foreign Loan Parties; provided
that in the case of the foregoing clause (A)-(D) (1) all such
intercompany Indebtedness shall be evidenced by promissory notes (in
form and substance reasonably acceptable to Agent) that are pledged to
Agent pursuant to the terms of the applicable Collateral Document, (2)
all such intercompany Indebtedness owed by Borrower or any Guarantor
shall be subordinated in right of payment to the payment in full of
the Obligations, or the Guaranteed Obligations, as the case may be,
pursuant to the terms of the applicable promissory notes or an
intercompany subordination agreement, and (3) any payment by any
Subsidiary of Borrower under any guaranty of the Obligations shall
result in a pro tanto reduction of the amount of any intercompany
Indebtedness owed by such Subsidiary to Borrower or to any of its
Subsidiaries for whose benefit such payment is made; (E) each Foreign
Loan Party may become and remain liable with respect to Indebtedness
owed to Borrower, which Indebtedness is evidenced by an Intercompany
Note, guaranteed by the Intercompany Note Guaranties and secured by
the Intercompany Collateral Documents pursuant to the provisions of
this Agreement, provided that the rate at which any such Indebtedness
bears interest shall not be less than, on a weighted average basis,
the rate at which the Loans bear interest; and (F) Borrower, any
Guarantor and any Foreign Loan Party may become liable with respect to
Indebtedness to any Subsidiary which is not a Guarantor or Foreign
Loan Party; provided that all such intercompany Indebtedness owed by
--------
Borrower, any Guarantor and any Foreign Loan Party shall be
subordinated in right of payment to the payment in full of the
Obligations, any payment under the Guaranty or any payment by a
Foreign Loan Party under any Intercompany Note or Intercompany Note
Guaranty;
(v) Borrower and its Subsidiaries, as applicable, may
remain liable with respect to Indebtedness described in Schedule 7.1
------------
annexed hereto;
(vi) Borrower may become and remain liable with respect to
the New Senior Debt, in the form and on the terms approved by Agent
pursuant to subsection 4.1Q;
(vii) Borrower and its Subsidiaries may become liable with
respect to Indebtedness described in subsection 7.2A(iv) in an
aggregate principal amount not to exceed $10,000,000 at any time
outstanding;
(viii) Borrower and its Subsidiaries may become and remain
liable with respect to other unsecured Indebtedness in an aggregate
principal amount not to exceed $5,000,000 at any time outstanding;
123
(ix) Borrower's South African Subsidiaries may become and
remain liable with respect to Indebtedness in a principal amount not
to exceed $15,000,000 outstanding at any time and Borrower's Chilean
Subsidiaries may become and remain liable with respect to Indebtedness
in a principal amount not to exceed $25,000,000 outstanding at any
time; and
(x) (A) To the extent approved by Agent in its
discretion, the Australian Joy Loan Parties may become and remain
liable with respect to an unsecured overdraft credit facility and the
Australian P&H Loan Parties may become and remain liable with respect
to an unsecured overdraft credit facility in an aggregate principal
amount for both such Foreign Loan Parties not to exceed $3,000,000;
and (B) the UK Loan Parties may become and remain liable with respect
to certain credit facilities provided by National Westminster Bank plc
in the ordinary course of such UK Loan Parties' business consistent
with past practices, including without limitation a BACS facility, a
DTEL facility and LNC car contracts, but excluding any foreign
currency exchange or similar facilities, for a period of 90 days from
the Closing Date or such longer period of time as may be approved by
Agent and with such reserves as may be required by Agent, in an
aggregate amount for all such facilities not to exceed $5,000,000.
7.2 Liens and Related Matters.
-------------------------
A. Prohibition on Liens. Borrower shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, create, incur, assume
or permit to exist any Lien on or with respect to any property or asset of any
kind (including any document or instrument in respect of goods or accounts
receivable) of Borrower or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the UCC or under any similar recording or notice statute, except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Collateral Documents
and the Intercompany Collateral Documents;
(iii) Liens described in Schedule 7.2 annexed hereto;
(iv) Liens on any asset existing at the time of
acquisition of such asset by Borrower or any Subsidiary thereof, or
Liens to secure the payment of all or any part of the purchase price
of an asset upon the acquisition of such asset by Borrower or a
Subsidiary thereof or to secure any Indebtedness permitted hereby
incurred by Borrower or a Subsidiary thereof at the time of or with
ninety days after the acquisition of such asset, which Indebtedness is
incurred for the purpose of financing all or any part of the purchase
price thereof, in each case to the extent permitted by Agent;
provided, however, that the Lien shall apply only to the asset
124
so acquired; and provided further that the aggregate of all amounts
secured by such Liens shall not exceed $10,000,000 at any time;
(v) Liens evidencing Capital Leases permitted by
subsection 7.1; and
(vi) Other Liens securing Indebtedness in an aggregate
amount not to exceed $1,000,000 at any time outstanding.
B. Equitable Lien in Favor of Lenders. If Borrower or any of
its Subsidiaries shall create or assume any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, other than Liens excepted by
the provisions of subsection 7.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Indebtedness secured thereby as long as any such
Indebtedness shall be so secured; provided that, notwithstanding the foregoing,
this covenant shall not be construed as a consent by Requisite Lenders to the
creation or assumption of any such Lien not permitted by the provisions of
subsection 7.2A.
C. No Further Negative Pledges. Except (i) with respect to
specific property encumbered to secure payment of particular Indebtedness or to
be sold pursuant to an executed agreement with respect to an Asset Sale, (ii) as
contained in licenses or leases with respect to the property licensed or leased
thereby entered into in the ordinary course of business, and (iii) to the extent
provided in the New Senior Debt, neither Borrower nor any of its Subsidiaries
shall enter into any agreement prohibiting the creation or assumption of any
Lien upon any of its properties or assets, whether now owned or hereafter
acquired.
D. No Restrictions on Subsidiary Distributions to Borrower or
Other Subsidiaries. Except as provided herein, Borrower will not, nor will it
permit any of its Subsidiaries (except Borrower's South African Subsidiaries
with respect to the Indebtedness permitted pursuant to subsection 7.1(ix)) to,
create or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any such Subsidiary to
(i) pay dividends or make any other distributions on any of such Subsidiary's
capital stock or other ownership interests owned by Borrower or any other
Subsidiary of Borrower, (ii) repay or prepay any Indebtedness owed by such
Subsidiary to Borrower or any other Subsidiary of Borrower, (iii) make loans or
advances to Borrower or any other Subsidiary of Borrower, or (iv) transfer any
of its property or assets to Borrower or any other Subsidiary of Borrower.
7.3 Investments; Acquisitions.
-------------------------
Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make or own any Investment in any Person, including any
Joint Venture, or acquire, by purchase or otherwise, all or substantially all
the business, property or fixed assets of, or capital stock or other ownership
interests of any Person, or any division or line of business of any Person
except:
(i) Borrower and its Subsidiaries may make and own
Investments in Cash Equivalents;
125
(ii) Borrower and Guarantors may make and own additional
Investments in Subsidiaries that are Guarantors or in Borrower; any
Foreign Loan Party may make and own Investments in any other Foreign
Loan Party in the same Approved Jurisdiction (except for Investments
by any Australian Joy Loan Party in any Australian P&H Loan Party and
any Investment by any Australian P&H Loan Party in any Australian Joy
Loan Party), in any other Foreign Subsidiary to the extent a part of
the UK Restructuring or as otherwise permitted pursuant to subsection
7.1(iv); any Subsidiary which is not a Guarantor or Foreign Loan Party
may make and own Investments in Borrower, any Guarantor and any
Foreign Loan Party or any other Subsidiary which is not a Guarantor or
a Foreign Loan Party;
(iii) Borrower may make and own Intercompany Loans to
Foreign Loan Parties to the extent permitted under subsection 7.1(iv);
Borrower may make Intercompany Loans to Beloit under the Beloit Note
in an aggregate initial principal amount which does not exceed
$15,000,000 and may own any collateral recovered as a result of the
foreclosure thereof, including without limitation the APP Note;
(iv) Borrower and its Subsidiaries may make Consolidated
Capital Expenditures permitted by subsection 7.8;
(v) Borrower and its Subsidiaries may continue to own the
Investments owned by them and described in Schedule 7.3 annexed
------------
hereto;
(vi) Borrower and its Domestic Subsidiaries may acquire
assets (including capital stock or other ownership interests) having a
fair market value not in excess of $500,000 in any one Fiscal Year and
$3,000,000 in the aggregate and continue to own such assets after the
acquisition thereof; provided that Borrower shall, and shall cause its
Subsidiaries to, comply with the requirements of subsections 6.9 and
6.10 with respect to each such acquisition that results in a Person
becoming a Subsidiary;
(vii) Borrower, any Guarantor and any Foreign Loan Party
may make and own additional Investments in Subsidiaries which are not
Guarantors or Foreign Loan Parties; provided that (a) the aggregate
--------
amount of all such Investments made after the Closing Date, together
with the aggregate amount of Indebtedness of such Subsidiaries under
subsection 7.1(iv)(C), does not exceed $4,000,000 in the aggregate
outstanding at any time;
(viii) Borrower and its Subsidiaries may make and maintain
Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and
suppliers, in each case arising in the ordinary course of business;
(ix) Borrower and its Subsidiaries may make and own
Investments permitted under subsection 7.7(iv); and
126
(x) Borrower may make Investments in Lender Interest Rate
Agreements pursuant to the terms of this Agreement.
7.4 Contingent Obligations.
----------------------
Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or become or remain liable with respect to any
Contingent Obligation, except:
(i) Subsidiaries of Borrower may become and remain liable
with respect to Contingent Obligations in respect of the Guaranty and
the Intercompany Note Guaranties;
(ii) Borrower may become and remain liable with respect to
Contingent Obligations in respect of Letters of Credit;
(iii) Borrower may become and remain liable with respect to
Contingent Obligations under Hedge Agreements in an aggregate notional
principal amount not to exceed the amount of the liabilities so
hedged, provided that Borrower shall not become or remain liable with
respect to Lender Interest Rate Agreements that are Hedge Agreements
of the type described in clause (ii) of the definition of "Interest
Rate Agreements" in subsection 1.1 (A) to the extent that the
aggregate Xxxx-to-Market Adjustment Amount of all such Hedge
Agreements would exceed $10,000,000 and (B) unless the Xxxx-to-Market
Adjustment Amount is supported by a Standby Letter of Credit
satisfactory to the applicable Interest Rate Exchanger;
(iv) Borrower and its Subsidiaries may become and remain
liable with respect to Contingent Obligations in respect of customary
indemnification and purchase price adjustment obligations incurred in
connection with Asset Sales or other sales of assets (including sales
of inventory and provision of services in the ordinary course of
business of Borrower and its Subsidiaries);
(v) Borrower and its Subsidiaries may become and remain
liable with respect to Contingent Obligations under guarantees in the
ordinary course of business of the obligations of suppliers,
customers, franchisees and licensees of Borrower and its Subsidiaries
in an aggregate amount not to exceed at any time $1,000,000;
(vi) Borrower and its Subsidiaries may become and remain
liable with respect to Contingent Obligations in respect of any
Indebtedness of Borrower or any of its Subsidiaries permitted by
subsection 7.1; provided however that no Subsidiary of Borrower may
-------- -------
become and remain liable with respect to Contingent Obligations in
respect of Indebtedness of Borrower permitted under subsection 7.1(vi)
unless such Subsidiary is also a Guarantor of the Obligations;
(vii) Borrower may become and remain liable with respect to
Contingent Obligations related to its South African Subsidiaries in an
aggregate amount not to exceed $15,000,000 at any time; and
(viii) Borrower and its Subsidiaries, as applicable, may
remain liable with respect to Contingent Obligations described in
Schedule 7.4 annexed hereto.
------------
127
7.5 Restricted Junior Payments.
--------------------------
Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, declare, order, pay, make or set apart any sum for any
Restricted Junior Payment; provided that so long as no Event of Default or
Potential Event of Default shall have occurred and be continuing or shall be
caused thereby, Borrower may (i) make regularly scheduled payments of interest
in respect of any Subordinated Indebtedness in accordance with the terms of, and
only to the extent required by, and subject to the subordination provisions
contained in, the indenture or other agreement pursuant to which such
Subordinated Indebtedness was issued, as such indenture or other agreement may
be amended from time to time to the extent permitted under subsection 7.15, (ii)
may make regularly scheduled payments of interest in respect of the New Senior
Debt, (iii) may repurchase stock of Borrower owned by an employee or director
thereof in an aggregate amount not to exceed $1,000,000 in any Fiscal Year or
$5,000,000 for all such repurchases since the Closing Date, and (iv) may
purchase stock of Borrower by way of a cashless exercise of options thereunder.
7.6 Financial Covenants.
-------------------
A. Minimum Interest Coverage Ratio. Borrower shall not permit the
ratio of (i) Consolidated EBITDA to (ii) Consolidated Interest Expense for any
four-Fiscal Quarter period (or such shorter period as may be indicated below)
ending during any of the periods set forth below to be less than the correlative
ratio indicated:
Period Minimum Interest
------ Coverage Ratio
--------------
One Fiscal Quarter period ending on the last
day of the 4/th/ Fiscal Quarter, Fiscal Year 2001 4.75:1.00
Two Fiscal Quarter period ending on the last
day of the 1st Fiscal Quarter, Fiscal Year 2002 5.00:1.00
Three Fiscal Quarter period ending on the
last day of the 2/nd/ Fiscal Quarter, Fiscal Year 2002 5.00:1.00
Four Fiscal Quarter period ending on the last
day of the 3/rd/ Fiscal Quarter, Fiscal Year 2002 5.00:1.00
Each four Fiscal Quarter period ending on the
last day of each Fiscal Quarter thereafter 5.00:1.00
128
B. Maximum Leverage Ratio. Borrower shall not permit the
Consolidated Leverage Ratio as at any date during any of the periods set forth
below to exceed the correlative ratio indicated:
Period Maximum Consolidated
------ Leverage Ratio
--------------
From the Closing Date to the last day of Fiscal Year 2001 3.50:1.00
From the first day of Fiscal Year 2002 to the last day
of the third Fiscal Quarter of Fiscal Year 2002 3.00:1.00
From the first day of the fourth Fiscal
Quarter of Fiscal Year 2002 to the Revolving
Loan Commitment Termination Date 2.50:1.00
C. Minimum Consolidated EBITDA. Borrower shall not permit
Consolidated EBITDA for any four-Fiscal Quarter period (or such shorter period
as may be indicated below) ending as of the last day of any Fiscal Quarter
occurring during any of the periods set forth below to be less than the
correlative amount indicated:
Period Minimum
------ Consolidated EBITDA
-------------------
One Fiscal Quarter period ending on the last
day of the 3/rd/ Fiscal Quarter, Fiscal Year 2001 $ 25,000,000
Two Fiscal Quarter period ending on the last
day of the 4/th/ Fiscal Quarter, Fiscal Year 2001 $ 65,000,000
Three Fiscal Quarter period ending on the
last day of the 1/st/ Fiscal Quarter, Fiscal Year 2002 $ 90,000,000
Four Fiscal Quarter period ending on the last
day of the 2/nd/ Fiscal Quarter, Fiscal Year 2002 $125,000,000
Each four Fiscal Quarter period ending on the
last day of each Fiscal Quarter thereafter $130,000,000
129
7.7 Restriction on Fundamental Changes; Asset Sales.
-----------------------------------------------
Borrower shall not, nor shall it permit any of its Subsidiaries to,
alter the corporate, capital or legal structure of Borrower or any of its
Subsidiaries, or enter into any transaction of merger or consolidation, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease or sub-lease (as lessor or sublessor),
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, property or assets (including its
notes or receivables and stock or other ownership interests of a Subsidiary,
whether newly issued or outstanding), whether now owned or hereafter acquired,
except:
(i) any Subsidiary of Borrower may be merged with or into
Borrower or any Guarantor, or be liquidated, wound up or dissolved, or
all or any part of its business, property or assets may be conveyed,
sold, leased, transferred or otherwise disposed of, in one transaction
or a series of transactions, to Borrower or any Guarantor; provided
that, in the case of such a merger, Borrower or such Guarantor shall
be the continuing or surviving Person; any Foreign Loan Party may be
merged with or into any other Foreign Loan Party in the same Approved
Jurisdiction (except for any merger by any Australian Joy Loan Party
with or into any Australian P&H Loan Party and any merger by any
Australian P&H Loan Party with or into any Australian Joy Loan Party)
or into any other Foreign Loan Party to the extent a part of the UK
Restructuring, or be liquidated, wound up or dissolved, or all or any
part of its business, property or assets may be conveyed, sold,
leased, transferred or otherwise disposed of, in one transaction or a
series of transactions, to any other Foreign Loan Party in the same
Approved Jurisdiction (except for any such transaction between any
Australian Joy Loan Party and any Australian P&H Loan Party); any
Immaterial Subsidiary may be liquidated, wound up or dissolved, or all
or any part of its business, property or assets may be conveyed, sold,
leased, transferred or otherwise disposed of, in one transaction or
series of transactions, to Borrower, any Guarantor, any other
Immaterial Subsidiary or any Foreign Loan Party;
(ii) Borrower and its Subsidiaries may sell or otherwise
dispose of assets in transactions that do not constitute Asset Sales;
provided that the consideration received for such assets shall be in
an amount at least equal to the fair market value thereof;
(iii) Borrower and its Subsidiaries may dispose of obsolete,
worn out or surplus property in the ordinary course of business, and
may make the Headquarters Sale;
(iv) Borrower and its Subsidiaries may make Asset Sales
resulting in Net Asset Sale Proceeds not in excess of $5,000,000 in
any Fiscal Year or $15,000,000 in the aggregate from the Closing Date
through the date of determination; provided that (x) the consideration
received for such assets shall be in an amount at least equal to the
greater of (i) the fair market value thereof, and (ii) the appraised
value thereof (as determined by Agent); (y) at least seventy-five
130
percent (75%) of the consideration received shall be cash, provided
that all non-cash consideration and promissory notes and other
evidence of any obligation of the purchaser to make future payments in
connection with such sale shall be pledged to, and subject to a First
Priority Lien in favor of, Agent for the benefit of Lenders pursuant
to the Collateral Documents, and further provided that such non-cash
consideration shall not exceed $1,000,000 in the aggregate outstanding
at any time; and (z) the proceeds of such Asset Sales shall be applied
as required by subsection 2.4B(iii)(a) or subsection 2.4D;
(v) Borrower and its Subsidiaries may make exchanges or trade-
ins of machinery and equipment, provided that the cash proceeds from
any such transaction shall be applied as required by subsection
2.4B(iii)(a) or subsection 2.4D; and
(vi) Borrower or a Subsidiary may sell or dispose of shares of
capital stock or other equity Securities of any of its Subsidiaries,
in order to qualify members of the Governing Body of the Subsidiary if
required by applicable law.
7.8 Consolidated Capital Expenditures.
---------------------------------
Borrower shall not, and shall not permit its Subsidiaries to, make or
incur Consolidated Capital Expenditures (excluding Net Insurance/Condemnation
Proceeds to the extent used by Borrower or any of its Subsidiaries pursuant to
the terms of subsection 6.4C to restore or replace the assets in respect of
which such Net Insurance/Condemnation Proceeds have been paid), in any Fiscal
Year, in an aggregate amount in excess of $35,000,000 for Fiscal Years 2001 and
2002 and $30,000,000 in any other Fiscal Year (the "Maximum Consolidated Capital
Expenditures Amount"); provided that the Maximum Consolidated Capital
Expenditures Amount for any Fiscal Year shall be increased by an amount equal to
the excess, if any, but in no event more than $15,000,000 of the Maximum
Consolidated Capital Expenditures Amount for the previous Fiscal Year over the
actual amount of Consolidated Capital Expenditures for such previous Fiscal
Year.
7.9 Restriction on Leases.
---------------------
Borrower shall not, nor shall it permit any of its Subsidiaries to,
(i) become liable in any way, whether directly or by assignment or as a
guarantor or other surety, for the obligations of the lessee under any lease,
whether an Operating Lease or a Capital Lease (other than intercompany leases
between or among Borrower and its wholly-owned Guarantors), or (ii) cause or
permit the liability of Borrower or Subsidiary under or in respect of such lease
to increase by any material amount, in each case unless, immediately after
giving effect to such incurrence of or increase in liability with respect to
such lease, the Consolidated Rental Payments at the time in effect during the
then current or any future period of 12 consecutive calendar months shall not
exceed $15,000,000.
7.10 Sales and Lease-Backs.
---------------------
Borrower shall not, nor shall it permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any
131
lease, whether an Operating Lease or a Capital Lease, of any property (whether
real, personal or mixed), whether now owned or hereafter acquired, (i) which
Borrower or any of its Subsidiaries has sold or transferred or is to sell or
transfer to any other Person (other than Borrower or any Guarantor) or (ii)
which Borrower or any of its Subsidiaries intends to use for substantially the
same purpose as any other property which has been or is to be sold or
transferred by Borrower or any of its Subsidiaries to any Person (other than
Borrower or any Guarantor) in connection with such lease; provided that Borrower
and its Subsidiaries may become and remain liable as lessee, guarantor or other
surety with respect to any such lease if and to the extent that Borrower or any
of its Subsidiaries would be permitted to enter into, and remain liable under,
such lease under subsection 7.9.
7.11 Sale or Discount of Receivables.
-------------------------------
Except for Permitted Discount Receivable Sales, Borrower shall not,
nor shall it permit any of its Subsidiaries to, directly or indirectly, sell
with recourse, or discount or otherwise sell for less than the face value
thereof, any of its notes or accounts receivable.
7.12 Transactions with Shareholders and Affiliates.
---------------------------------------------
Borrower shall not, nor shall it permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any holder of 5% or more of any
class of equity Securities of Borrower or with any Affiliate of Borrower or of
any such holder, on terms that are less favorable to Borrower or such
Subsidiary, as the case may be, than those that might be obtained at the time
from Persons who are not such a holder or Affiliate; provided that the foregoing
restriction shall not apply to (i) any transaction between Borrower and any of
its wholly-owned Subsidiaries or between any of its wholly-owned Subsidiaries
and (ii) reasonable and customary fees paid to members of the Governing Bodies
of Borrower and its Subsidiaries.
7.13 Disposal of Subsidiary Stock.
----------------------------
Except pursuant to the Collateral Documents and except for any sale of
100% of the capital stock or other equity Securities of any of its Subsidiaries
in compliance with the provisions of subsections 7.7(iv) and 7.7(vi), Borrower
shall not:
(i) directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of capital stock or other equity
Securities of any of its Subsidiaries, except to qualify directors if
required by applicable law; or
(ii) permit any of its Subsidiaries directly or indirectly to
sell, assign, pledge or otherwise encumber or dispose of any shares of
capital stock or other equity Securities of any of its Subsidiaries
(including such Subsidiary), except to Borrower, another wholly-owned
Guarantor, or to qualify directors if required by applicable law.
132
7.14 Conduct of Business.
-------------------
From and after the Closing Date, Borrower shall not, nor shall it
permit any of its Subsidiaries to, engage in any business other than (i) the
businesses engaged in by Borrower and its Subsidiaries on the Closing Date and
similar or related businesses and (ii) such other lines of business as may be
consented to by Requisite Lenders.
7.15 Amendments or Waivers of Certain Agreements; Amendments of Documents
--------------------------------------------------------------------
Relating to Subordinated Indebtedness.
-------------------------------------
A. Amendments or Waivers of Certain Agreements. Neither Borrower
nor any of its Subsidiaries will agree to any material amendment to, or waive
any of its material rights under, any Related Agreements (other than any
agreement evidencing or governing any Subordinated Indebtedness) after the
Closing Date without in each case obtaining the prior written consent of
Requisite Lenders to such amendment or waiver.
B. Amendments of Documents Relating to Subordinated Indebtedness.
Borrower shall not, nor shall it permit any of its Subsidiaries to, amend or
otherwise change the terms of any Subordinated Indebtedness, or make any payment
consistent with an amendment thereof or change thereto, if the effect of such
amendment or change is to increase the interest rate on such Subordinated
Indebtedness, change (to earlier dates) any dates upon which payments of
principal or interest are due thereon, change any event of default or condition
to an event of default with respect thereto (other than to eliminate any such
event of default or increase any grace period related thereto), change the
redemption, prepayment or defeasance provisions thereof, change the
subordination provisions thereof (or of any guaranty thereof), or change any
collateral therefor (other than to release such collateral), or if the effect of
such amendment or change, together with all other amendments or changes made, is
to increase materially the obligations of the obligor thereunder or to confer
any additional rights on the holders of such Subordinated Indebtedness (or a
trustee or other representative on their behalf) which would be adverse to
Borrower or Lenders.
7.16 Fiscal Year.
-----------
Borrower shall not change its Fiscal Year-end from October 31.
7.17 Deposit Accounts.
----------------
Borrower shall not, nor shall it permit any Guarantor to, maintain any
Deposit Account which is not a Lock Box Account or a Concentration Account or a
disbursement account under the exclusive dominion and control of Agent.
Notwithstanding the foregoing, with the prior approval of Agent, Borrower and
any Guarantor shall be permitted to maintain demand deposit accounts for
purposes of effecting its various daily operating disbursements, provided that
Agent is granted a perfected security interest in any such account on terms
reasonably satisfactory to Agent within 30 days after the Closing Date, unless
otherwise approved by Agent. With respect to Foreign Loan Parties, (a) Borrower
has delivered to Agent as of the Closing Date a correct and complete listing of
all Deposit Accounts maintained by each Foreign Loan Party, (b) after the
Closing Date, no Foreign Loan Party shall open any new Deposit Account or close
any existing Deposit Account without the prior written approval of
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Agent, (c) the Foreign Loan Parties in any Approved Jurisdiction shall not
maintain more than $10,000,000 in the aggregate in such Foreign Loan Parties'
Deposit Accounts for a period in excess of fourteen (14) days without the prior
written approval of Agent and (d) Borrower shall not permit any Foreign Loan
Party to maintain any Deposit Account which is not subject to the provisions of
subsection 2.11.
7.18 Restrictions on HULC.
--------------------
Notwithstanding anything to the contrary contained in this
Agreement, Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, except to the extent a part of the UK Restructuring:
make or permit to exist any loan (other than any intercompany loans to the
extent outstanding on the Closing Date) from Borrower or such Subsidiary to, or
otherwise accept, any Indebtedness of HULC; make or own any Investment in HULC;
become or remain liable with respect to any Contingent Obligation or other
contingent liability in respect of HULC; or sell or otherwise transfer any of
its property or assets to HULC. HULC shall not create or permit to exist any
Lien or other claim in favor of any third party on any of its assets or revenues
and shall not create or permit to exist any Indebtedness or other liabilities,
contingent or otherwise, except to the extent a part of the UK Restructuring and
other than any liabilities under any intercompany notes to Borrower and its
Subsidiaries and tax liabilities to the extent permitted pursuant to subsections
5.7 and 6.3.
Section 8. EVENTS OF DEFAULT
If any of the following conditions or events ("Events of Default")
shall occur:
8.1 Failure to Make Payments When Due.
---------------------------------
Failure by Borrower to pay any installment of principal of any Loan
when due, whether at stated maturity, by acceleration, by notice of voluntary
prepayment, by mandatory prepayment or otherwise; failure by Borrower to pay
when due any amount payable to an Issuing Lender in reimbursement of any drawing
under a Letter of Credit; or failure by Borrower to pay any interest on any Loan
or any fee or any other amount due under this Agreement within five days after
the date due; or
8.2 Default in Other Agreements.
---------------------------
(i) Except to the extent a part of the UK Restructuring with
respect to certain intercompany Indebtedness, failure of Borrower or
any of its Subsidiaries to pay when due any principal of or interest
on or any other amount payable in respect of one or more items of
Indebtedness (other than Indebtedness referred to in subsection 8.1)
or Contingent Obligations in an individual principal amount of
$500,000 or more or with an aggregate principal amount of $1,000,000
or more, in each case beyond the end of any grace period provided
therefor (or, in the case of any such Indebtedness that is
intercompany Indebtedness, beyond thirty (30) days after such
failure); or
(ii) breach or default by Borrower or any of its Subsidiaries
with respect to any other material term of (a) one or more items of
Indebtedness or
134
Contingent Obligations in the individual or aggregate principal
amounts referred to in clause (i) above or (b) any loan agreement,
mortgage, indenture or other agreement relating to such item(s) of
Indebtedness or Contingent Obligation(s), if the effect of such
breach or default is to cause, or to permit the holder or holders of
that Indebtedness or Contingent Obligation(s) (or a trustee on
behalf of such holder or holders) to cause, that Indebtedness or
Contingent Obligation(s) to become or be declared due and payable
prior to its stated maturity or the stated maturity of any
underlying obligation, as the case may be (upon the giving or
receiving of notice, lapse of time, both, or otherwise); or
8.3 Breach of Certain Covenants.
---------------------------
Failure of Borrower to perform or comply with any term or condition
contained in subsection 2.5 or 6.2 or Section 7 of this Agreement; or
8.4 Breach of Warranty.
------------------
Any representation, warranty, certification or other statement made
by Borrower or any of its Subsidiaries in any Loan Document or in any statement
or certificate at any time given by Borrower or any of its Subsidiaries in
writing pursuant hereto or thereto or in connection herewith or therewith shall
be false in any material respect on the date as of which made; or
8.5 Other Defaults Under Loan Documents.
-----------------------------------
Borrower or any of its Subsidiaries shall default in the performance
of or compliance with any term contained in this Agreement or any of the other
Loan Documents, other than any such term referred to in any other subsection of
this Section 8, and such default shall not have been remedied or waived within
30 days after the earlier of (i) an Officer of Borrower or such Subsidiary
becoming aware of such default or (ii) receipt by Borrower of notice from Agent
or any Lender of such default; or
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.
----------------------------------------------------
(i) A court having jurisdiction in the premises shall enter a
decree or order for relief in respect of Borrower or any of its
Subsidiaries (other than Immaterial Subsidiaries) in an involuntary
case under the Bankruptcy Code or under any other Insolvency Laws
which decree or order is not stayed; or any other similar relief
shall be granted under any applicable Insolvency Laws; or
(ii) an involuntary case shall be commenced against Borrower or
any of its Subsidiaries (other than Immaterial Subsidiaries) under
the Bankruptcy Code or under any other Insolvency Laws; or a decree
or order of a court having jurisdiction in the premises for the
appointment of an administrator, a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar
powers over Borrower or any of its Subsidiaries (other than
Immaterial Subsidiaries), or over all or a substantial part of its
property, shall have been entered; or there shall have occurred the
involuntary appointment of an interim receiver, trustee or other
135
custodian of Borrower or any of its Subsidiaries (other than
Immaterial Subsidiaries) for all or a substantial part of its
property; or a warrant of attachment, execution or similar process
shall have been issued against any substantial part of the property
of Borrower or any of its Subsidiaries (other than Immaterial
Subsidiaries), and any such event described in this clause (ii)
shall continue for 60 days unless dismissed, bonded or discharged;
or
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.
--------------------------------------------------
(i) Except in connection with the Company Bankruptcy
Proceeding, Borrower or any of its Subsidiaries (other than
Immaterial Subsidiaries) shall have an order for relief entered with
respect to it or commence a voluntary case under the Bankruptcy Code
or under any other Insolvency Laws, or shall consent to or petition
for the entry of an order for relief in an involuntary case, or to
the conversion of an involuntary case to a voluntary case, under any
such law, or shall consent to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a
substantial part of its property; or Borrower or any of its
Subsidiaries (other than Immaterial Subsidiaries) shall make any
assignment for the benefit of creditors; or
(ii) Borrower or any of its Subsidiaries (other than Immaterial
Subsidiaries) shall be unable, or shall fail generally, or shall
admit in writing its inability, to pay its debts as such debts
become due; or the Governing Body of Borrower or any of its
Subsidiaries (other than Immaterial Subsidiaries) (or any committee
thereof) shall adopt any resolution or otherwise authorize any
action to approve any of the actions referred to in clause (i) above
or this clause (ii); or
8.8 Judgments and Attachments.
-------------------------
Any money judgment, writ or warrant of attachment or similar process
involving (i) in any individual case an amount in excess of $1,000,000 or (ii)
in the aggregate at any time an amount in excess of $2,500,000 (in either case
not adequately covered by insurance as to which a solvent and unaffiliated
insurance company has acknowledged coverage) shall be entered or filed against
Borrower or any of its Subsidiaries (other than Immaterial Subsidiaries) or any
of their respective assets and shall remain undischarged, unvacated, unbonded or
unstayed for a period of 60 days (or in any event later than five days prior to
the date of any proposed sale thereunder); or
8.9 Dissolution.
-----------
Any order, judgment or decree shall be entered against Borrower or
any of its Subsidiaries (other than Immaterial Subsidiaries) decreeing the
dissolution or split up of Borrower or that Subsidiary and such order shall
remain undischarged or unstayed for a period in excess of 30 days; or
136
8.10 Employee Benefit Plans.
----------------------
There shall occur one or more ERISA Events which individually or in
the aggregate results in or could reasonably be expected to result in a Material
Adverse Effect during the term of this Agreement; or there shall exist an amount
of unfunded benefit liabilities (as set forth in the most recent valuation
report), individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities), which exceeds $50,000,000.
8.11 Change in Control.
-----------------
A Change in Control shall have occurred; or
8.12 Invalidity of Any Guaranty.
--------------------------
Any Guaranty or any Intercompany Note Guaranty or Beloit Note
Guaranty for any reason, other than the satisfaction in full of all Obligations,
ceases to be in full force and effect (other than in accordance with its terms)
or is declared to be null and void, or any Loan Party contests the validity or
enforceability of any Loan Document in writing or denies in writing that it has
any further liability, including without limitation with respect to future
advances by Lenders, under any Loan Document to which it is a party, or gives
notice to such effect; or
8.13 Failure of Security.
-------------------
Any Collateral Document shall, at any time, cease to be in full
force and effect (other than by reason of a release of Collateral in accordance
with the terms thereof) or shall be declared null and void, or the validity or
enforceability thereof shall be contested by any Loan Party, or Agent shall not
have or cease to have a valid and perfected First Priority Lien in the
Collateral; or
8.14 Failure to Consummate Reorganization and Other Transactions.
-----------------------------------------------------------
The reorganization of Borrower and Debtor Subsidiaries as
contemplated in the Approved Plan of Reorganization, or any of the other
transactions to be consummated on or prior to the Closing Date pursuant to the
Loan Documents or the Related Agreements shall not be consummated in accordance
with this Agreement and the applicable Related Agreements on or prior to the
Closing Date; or such reorganization or any of the other such transactions shall
be unwound, reversed or otherwise rescinded in whole or in material part for any
reason:
THEN (i) upon the occurrence of any Event of Default described in
subsection 8.6 or 8.7, each of (a) the unpaid principal amount of and accrued
interest on the Loans, (b) an amount equal to the maximum amount that may at any
time be drawn under all Letters of Credit then outstanding (whether or not any
beneficiary under any such Letter of Credit shall have presented, or shall be
entitled at such time to present, the drafts or other documents or certificates
required to draw under such Letter of Credit), and (c) all other Obligations
shall automatically become immediately due and payable, without presentment,
demand, protest or other requirements of any kind, all of which are hereby
expressly waived by Borrower, and the obligation of each Lender to make any
Loan, the obligation of Agent to issue any Letter of Credit
137
and the right of any Lender to issue any Letter of Credit hereunder shall
thereupon terminate, and (ii) upon the occurrence and during the continuation of
any other Event of Default, Agent shall, upon the written request or with the
written consent of Requisite Lenders, by written notice to Borrower, declare all
or any portion of the amounts described in clauses (a) through (c) above to be,
and the same shall forthwith become, immediately due and payable, and the
obligation of each Lender to make any Loan, the obligation of Agent to issue any
Letter of Credit and the right of any Lender to issue any Letter of Credit
hereunder shall thereupon terminate; provided that the foregoing shall not
affect in any way the obligations of Lenders under subsection 3.3C(i).
Any amounts described in clause (b) above, when received by Agent,
shall be held by Agent pursuant to the terms of the Security Agreement and shall
be applied as therein provided.
Notwithstanding anything contained in the second preceding
paragraph, if at any time within 60 days after an acceleration of the Loans
pursuant to such paragraph Borrower shall pay all arrears of interest and all
payments on account of principal which shall have become due otherwise than as a
result of such acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified in this Agreement)
and all Events of Default and Potential Events of Default (other than non-
payment of the principal of and accrued interest on the Loans, in each case
which is due and payable solely by virtue of acceleration) shall be remedied or
waived pursuant to subsection 10.6, then Requisite Lenders, by written notice to
Borrower, may at their option rescind and annul such acceleration and its
consequences; but such action shall not affect any subsequent Event of Default
or Potential Event of Default or impair any right consequent thereon. The
provisions of this paragraph are intended merely to bind Lenders to a decision
which may be made at the election of Requisite Lenders and are not intended,
directly or indirectly, to benefit Borrower, and such provisions shall not at
any time be construed so as to grant Borrower the right to require Lenders to
rescind or annul any acceleration hereunder or to preclude Agent or Lenders from
exercising any of the rights or remedies available to them under any of the Loan
Documents, even if the conditions set forth in this paragraph are met.
Section 9. AGENT
9.1 Appointment.
-----------
A. Appointment of Agent. BTCo is hereby appointed Agent hereunder
and under the other Loan Documents. Each Lender hereby authorizes Agent to act
as its agent in accordance with the terms of this Agreement and the other Loan
Documents. Agent agrees to act upon the express conditions contained in this
Agreement and the other Loan Documents, as applicable. Each Interest Rate
Exchanger (i) hereby appoints Agent to act as agent in connection with the
applicable Lender Interest Rate Agreement, it being understood and agreed by
each Interest Rate Exchanger that it shall have no right individually to enforce
any remedy in connection with any Lender Interest Rate Agreement, and (ii)
hereby agrees to indemnify Agent pursuant to subsection 9.4A in connection with
actions taken (or not taken) by Agent in connection therewith. The provisions
of this Section 9 are solely for the benefit of Agent and Lenders and neither
Borrower nor any of its Subsidiaries shall have rights as a third party
beneficiary of any of the provisions thereof. In performing its functions and
duties under this
138
Agreement, Agent (other than as provided in subsection 2.1E) shall act solely as
an agent of Lenders and does not assume and shall not be deemed to have assumed
any obligation towards or relationship of agency or trust with or for Borrower
or any of its Subsidiaries.
B. Appointment of Supplemental Collateral Agents. It is the
purpose of this Agreement and the other Loan Documents that there shall be no
violation of any law of any jurisdiction denying or restricting the right of
banking corporations or associations to transact business as agent or trustee in
such jurisdiction. It is recognized that in case of litigation under this
Agreement or any of the other Loan Documents, and in particular in case of the
enforcement of any of the Loan Documents, or in case Agent reasonably deems that
by reason of any present or future law of any jurisdiction it may not exercise
any of the rights, powers or remedies granted herein or in any of the other Loan
Documents or take any other action which may be desirable or necessary in
connection therewith, it may be necessary that Agent appoint an additional
individual or institution as a separate trustee, co-trustee, collateral agent or
collateral co-agent (any such additional individual or institution being
referred to herein individually as a "Supplemental Collateral Agent" and
collectively as "Supplemental Collateral Agents").
In the event that Agent appoints a Supplemental Collateral Agent
with respect to any Collateral, (i) each and every right, power, privilege or
duty expressed or intended by this Agreement or any of the other Loan Documents
to be exercised by or vested in or conveyed to Agent with respect to such
Collateral shall be exercisable by and vest in such Supplemental Collateral
Agent to the extent, and only to the extent, necessary to enable such
Supplemental Collateral Agent to exercise such rights, powers and privileges
with respect to such Collateral and to perform such duties with respect to such
Collateral, and every covenant and obligation contained in the Loan Documents
and necessary to the exercise or performance thereof by such Supplemental
Collateral Agent shall run to and be enforceable by either Agent or such
Supplemental Collateral Agent, and (ii) the provisions of this Section 9 and of
subsections 10.2 and 10.3 that refer to Agent shall inure to the benefit of such
Supplemental Collateral Agent and all references therein to Agent shall be
deemed to be references to Agent and/or such Supplemental Collateral Agent, as
the context may require.
Should any instrument in writing from Borrower or any of its
Subsidiaries be required by any Supplemental Collateral Agent so appointed by
Agent for more fully and certainly vesting in and confirming to him, her or it
such rights, powers, privileges and duties, Borrower shall, or shall cause its
Subsidiaries to, execute, acknowledge and deliver any and all such instruments
promptly upon request by Agent. In case any Supplemental Collateral Agent, or a
successor thereto, shall die, become incapable of acting, resign or be removed,
all the rights, powers, privileges and duties of such Supplemental Collateral
Agent, to the extent permitted by law, shall vest in and be exercised by Agent
until the appointment of a new Supplemental Collateral Agent.
9.2 Powers and Duties; General Immunity.
-----------------------------------
X. Xxxxxx; Duties Specified. Each Lender irrevocably authorizes
Agent to take such action on such Lender's behalf and to exercise such powers,
rights and remedies hereunder and under the other Loan Documents as are
specifically delegated or granted to Agent by the terms hereof and thereof,
together with such powers, rights and remedies as are
139
reasonably incidental thereto. Agent shall have only those duties and
responsibilities that are expressly specified in this Agreement and the other
Loan Documents. Agent may exercise such powers, rights and remedies and perform
such duties by or through its agents or employees. Agent shall not have, by
reason of this Agreement or any of the other Loan Documents, a fiduciary
relationship in respect of any Lender; and nothing in this Agreement or any of
the other Loan Documents, expressed or implied, is intended to or shall be so
construed as to impose upon Agent any obligations in respect of this Agreement
or any of the other Loan Documents except as expressly set forth herein or
therein.
B. No Responsibility for Certain Matters. Agent shall not be
responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement or any
other Loan Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by Agent to Lenders or by or on behalf of
Borrower to Agent or any Lender in connection with the Loan Documents and the
transactions contemplated thereby or for the financial condition or business
affairs of Borrower or any other Person liable for the payment of any
Obligations, nor shall Agent be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained in any of the Loan Documents or as to the use of the
proceeds of the Loans or the use of the Letters of Credit or as to the existence
or possible existence of any Event of Default or Potential Event of Default.
Anything contained in this Agreement to the contrary notwithstanding, Agent
shall not have any liability arising from confirmations of the amount of
outstanding Loans or the Letter of Credit Usage or the component amounts
thereof.
C. Exculpatory Provisions. Neither Agent nor any of its officers,
directors, employees or agents shall be liable to Lenders for any action taken
or omitted by Agent under or in connection with any of the Loan Documents except
to the extent caused by Agent's gross negligence or willful misconduct. Agent
shall be entitled to refrain from any act or the taking of any action (including
the failure to take an action) in connection with this Agreement or any of the
other Loan Documents or from the exercise of any power, discretion or authority
vested in it hereunder or thereunder unless and until Agent shall have received
instructions in respect thereof from Requisite Lenders (or such other Lenders as
may be required to give such instructions under subsection 10.6) and, upon
receipt of such instructions from Requisite Lenders (or such other Lenders, as
the case may be), Agent shall be entitled to act or (where so instructed)
refrain from acting, or to exercise such power, discretion or authority, in
accordance with such instructions. Without prejudice to the generality of the
foregoing, (i) Agent shall be entitled to rely, and shall be fully protected in
relying, upon any communication, instrument or document believed by it to be
genuine and correct and to have been signed or sent by the proper person or
persons, and shall be entitled to rely and shall be protected in relying on
opinions and judgments of attorneys (who may be attorneys for Borrower and its
Subsidiaries), accountants, experts and other professional advisors selected by
it; and (ii) no Lender shall have any right of action whatsoever against Agent
as a result of Agent acting or (where so instructed) refraining from acting
under this Agreement or any of the other Loan Documents in accordance with the
instructions of Requisite Lenders (or such other Lenders as may be required to
give such instructions under subsection 10.6).
140
D. Agent Entitled to Act as Lender. The agency hereby created
shall in no way impair or affect any of the rights and powers of, or impose any
duties or obligations upon, Agent in its individual capacity as a Lender
hereunder. With respect to its participation in the Loans and the Letters of
Credit, Agent shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not performing the duties and
functions delegated to it hereunder, and the term "Lender" or "Lenders" or any
similar term shall, unless the context clearly otherwise indicates, include
Agent in its individual capacity. Agent and its Affiliates may accept deposits
from, lend money to and generally engage in any kind of banking, trust,
financial advisory or other business with Borrower or any of its Affiliates as
if it were not performing the duties specified herein, and may accept fees and
other consideration from Borrower for services in connection with this Agreement
and otherwise without having to account for the same to Lenders.
9.3 Independent Investigation by Lenders; No Responsibility For
-----------------------------------------------------------
Appraisal of Creditworthiness.
-----------------------------
Each Lender agrees that it has made its own independent
investigation of the financial condition and affairs of Borrower and its
Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit hereunder and that it has made and shall continue to make its
own appraisal of the creditworthiness of Borrower and its Subsidiaries. Agent
shall not have any duty or responsibility, either initially or on a continuing
basis, to make any such investigation or any such appraisal on behalf of Lenders
or to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the making of the Loans or at
any time or times thereafter, and Agent shall not have any responsibility with
respect to the accuracy of or the completeness of any information provided to
Lenders.
9.4 Right to Indemnity.
------------------
A. Indemnity to Agent. Each Lender, in proportion to its Pro Rata
Share, severally agrees to indemnify Agent and the officers, directors,
employees, agents, attorneys, professional advisors and affiliates of Agent to
the extent that any such Person shall not have been reimbursed by Borrower, for
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including counsel fees and
disbursements and fees and disbursements of any financial advisor engaged by
Agent) or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against Agent or any other such Persons in
exercising the powers, rights and remedies of Agent or performing duties of
Agent hereunder or under the other Loan Documents or otherwise in its capacity
as Agent in any way relating to or arising out of this Agreement or the other
Loan Documents; provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from Agent's gross negligence or
willful misconduct. If any indemnity furnished to Agent or any other such
Person for any purpose shall, in the opinion of Agent, be insufficient or become
impaired, Agent may call for additional indemnity and cease, or not commence, to
do the acts indemnified against until such additional indemnity is furnished.
B. Indemnity to Security Trustee. Each Lender, in proportion to
its Pro Rata Share, severally agrees to indemnify The Law Debenture Trust
Corporation p.l.c.
141
("LDTC"), as security trustee under a Security Trust Deed (the "Security Trust
Deed") dated on or about the date of this Agreement among Borrower, Agent, LDTC
and Harnischfeger Industries Limited in relation to that certain Debenture (the
"Debenture") dated on or about the date of this Agreement between Harnischfeger
Industries Limited, the additional chargors which are party thereto and LDTC and
any other documents entered into by LDTC in connection therewith, and the
officers, directors, employees, agents, attorneys, professional advisors and
affiliates of LDTC, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including counsel fees and disbursements and fees and disbursements of any
financial advisor engaged by LDTC) or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against LDTC or any
other such Persons, in exercising the powers, rights and remedies of LDTC or
performing duties of LDTC pursuant to the Security Trust Deed or the Debenture
or in any way relating to or arising out of the Security Trust Deed or the
Debenture or the other documents or instruments relating thereto, to the same
extent of the indemnity granted to Agent pursuant to subsection 9.4A. This
subsection 9.4B shall not be amended, modified, revised or terminated without
the prior written approval of LDTC.
9.5 Successor Agent.
---------------
Agent may, without the consent of any Lender or Borrower, resign at
any time by giving 30 days' prior written notice thereof to Lenders and
Borrower. Upon any such notice of resignation, Requisite Lenders shall have the
right, upon five Business Days' notice to Borrower and if no Potential Event of
Default or Event of Default has occurred and is continuing, Borrower's consent
thereto (which shall not be unreasonably withheld, conditioned or delayed), to
appoint a successor Agent. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, that successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent and the retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 9 shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent under
this Agreement.
9.6 Collateral Documents and Guaranties.
-----------------------------------
Each Lender hereby further authorizes Agent, on behalf of and for
the benefit of Lenders, to enter into each Collateral Document as secured party
and to be the agent for and representative of Lenders under each Guaranty, and
each Lender agrees to be bound by the terms of each Collateral Document and
Guaranty; provided that Agent shall not (i) enter into or consent to any
material amendment, modification, termination or waiver of any provision
contained in any Collateral Document, Guaranty, Intercompany Note, Intercompany
Note Guaranty, Intercompany Collateral Document, Beloit Note, Beloit Note
Guaranty or Beloit Collateral Document or (ii) release any Collateral (except as
otherwise expressly permitted or required pursuant to the terms of this
Agreement or the applicable Collateral Document), in each case without the prior
consent of Requisite Lenders (or, if required pursuant to subsection 10.6, such
higher percentage of or all Lenders); provided further, however, that, without
further written consent or authorization from Lenders, Agent may execute any
documents or instruments necessary to (a) release any Lien encumbering any item
of Collateral that is the subject of a sale or other disposition of assets
permitted by this Agreement or to which Requisite Lenders have otherwise
consented or
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(b) release any Guarantor from the applicable Guaranty or Foreign Loan Party
from the applicable Intercompany Guaranty or any guarantor from the Beloit Note
Guaranty if all of the capital stock or other ownership interests of such
Guarantor or Foreign Loan Party or other guarantor is sold to any Person (other
than an Affiliate of Borrower) pursuant to a sale or other disposition permitted
hereunder or to which Requisite Lenders have otherwise consented. Anything
contained in any of the Loan Documents to the contrary notwithstanding,
Borrower, Agent and each Lender hereby agree that (X) no Lender shall have any
right individually to realize upon any of the Collateral under any Collateral
Document to enforce any Guaranty or Intercompany Guaranty or Beloit Note
Guaranty, it being understood and agreed that all powers, rights and remedies
under the Collateral Documents and the Guaranties or Intercompany Guaranty or
Beloit Note Guaranty may be exercised solely by Agent for the benefit of Lenders
in accordance with the terms thereof, and (Y) in the event of a foreclosure by
Agent on any of the Collateral pursuant to a public or private sale, Agent or
any Lender may be the purchaser of any or all of such Collateral at any such
sale and Agent, as agent for and representative of Lenders (but not any Lender
or Lenders in its or their respective individual capacities unless Requisite
Lenders shall otherwise agree in writing) shall be entitled, for the purpose of
bidding and making settlement or payment of the purchase price for all or any
portion of the Collateral sold at any such public sale, to use and apply any of
the Obligations as a credit on account of the purchase price for any collateral
payable by Agent at such sale.
9.7 Agent May File Proofs of Claim.
------------------------------
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to Borrower or any of the Subsidiaries of
Borrower, Agent (irrespective of whether the principal of any Loan shall then be
due and payable as herein expressed or by declaration or otherwise and
irrespective of whether Agent shall have made any demand on Borrower) shall be
entitled and empowered, by intervention in such proceeding or otherwise
(i) to file and prove a claim for the whole amount of
principal and interest owing and unpaid in respect of the Loans and
any other Obligations that are owing and unpaid and to file such
other papers or documents as may be necessary or advisable in order
to have the claims of Lenders and Agent (including any claim for the
reasonable compensation, expenses, disbursements and advances of
Lenders and Agent and their agents and counsel and all other amounts
due Lenders and Agent under subsections 2.3 and 10.2) allowed in
such judicial proceeding, and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the
same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to Agent and, in the event that Agent shall
consent to the making of such payments directly to Lenders, to pay to Agent any
amount due for the reasonable compensation, expenses, disbursements and advances
of Agent and its agents and counsel, and any other amounts due Agent under
subsections 2.3 and 10.2 hereof.
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Nothing herein contained shall be deemed to authorize Agent to
authorize or consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the Obligations
or the rights of any Lenders or to authorize Agent to vote in respect of the
claim of any Lender in any such proceeding.
SECTION 10. MISCELLANEOUS
10.1 Successors and Assigns; Assignments and Participations in Loans and
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Letters of Credit.
-----------------
A. General. This Agreement shall be binding upon the parties
hereto and their respective successors and assigns and shall inure to the
benefit of the parties hereto and the successors and assigns of Lenders (it
being understood that Lenders' rights of assignment are subject to the further
provisions of this subsection 10.1). None of Borrower's rights or obligations
hereunder nor any interest therein may be assigned or delegated by Borrower
without the prior written consent of all Lenders (and any attempted assignment
or transfer by Borrower without such consent shall be null and void). No sale,
assignment or transfer or participation of any Letter of Credit or any
participation therein may be made separately from a sale, assignment, transfer
or participation of a corresponding interest in the Revolving Loan Commitment
and the Revolving Loans of the Lender effecting such sale, assignment, transfer
or participation. Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, the Affiliates of each of Agent and Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.
B. Assignments.
(i) Amounts and Terms of Assignments. Any Lender may
--------------------------------
assign to one or more other Lenders, Affiliates of Lenders,
Affiliated Funds of Lenders or, as reasonably approved by Agent
and, provided no Potential Event of Default or Event of Default is
then continuing, Borrower, other Eligible Assignees, all or any
portion of its rights and obligations under this Agreement;
provided that (a) except (1) in the case of an assignment of the
entire remaining amount of the assigning Lender's rights and
obligations under this Agreement or (2) in the case of an
assignment to a Lender or an Affiliate of a Lender or an Affiliated
Fund of a Lender, the aggregate amount of the Revolving Loan
Exposure or Term Loan Exposure, as the case may be, of the
assigning Lender and the assignee subject to each such assignment
shall not be less than $3,000,000 (unless Agent otherwise consents,
such consent not to be unreasonably withheld or delayed), (b) each
partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender's rights and
obligations under this Agreement with respect to the Loan or the
Commitment assigned, (c) the parties to each assignment shall
execute and deliver to Agent an Assignment Agreement, together with
a processing and recordation fee of $3,500 (unless the assignee is
an Affiliate or an Affiliated Fund of the assignor, in which case
no fee shall be required), and the Eligible Assignee, if it shall
not be a Lender, shall deliver to Agent information reasonably
requested by Agent, including such forms, certificates or other
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evidence, if any, with respect to United States federal income tax
withholding matters as the assignee under such Assignment Agreement
may be required to deliver to Agent pursuant to subsection
2.7B(iii), and (d) except in the case of an assignment to another
Lender, an Affiliate of a Lender or an Affiliated Fund of a Lender,
Agent and, provided no Potential Event of Default or Event of
Default is then continuing, Borrower shall have consented thereto.
Upon such execution, delivery and consent, from and after the
effective date specified in such Assignment Agreement, (y) the
assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant
to such Assignment Agreement, shall have the rights and obligations
of a Lender hereunder and (z) the assigning Lender thereunder
shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such Assignment Agreement,
relinquish its rights (other than any rights which survive the
termination of this Agreement under subsection 10.9B) and be
released from its obligations under this Agreement (and, in the
case of an Assignment Agreement covering all or the remaining
portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto; provided
that, anything contained in any of the Loan Documents to the
contrary notwithstanding, if such Lender is the Issuing Lender with
respect to any outstanding Letters of Credit such Lender shall
continue to have all rights and obligations of an Issuing Lender
with respect to such Letters of Credit until the cancellation or
expiration of such Letters of Credit and the reimbursement of any
amounts drawn thereunder). The assigning Lender shall, upon the
effectiveness of such assignment or as promptly thereafter as
practicable, surrender its Notes to Agent for cancellation, and
thereupon new Notes shall be issued to the assignee and/or to the
assigning Lender, substantially in the form of Exhibit IV-A or
------------
Exhibit IV-B annexed hereto, as the case may be, with appropriate
------------
insertions, to reflect the new Commitments and/or outstanding
Revolving Loans and/or outstanding Term Loans, as the case may be,
of the assignee and/or the assigning Lender. Other than as provided
in subsection 10.5, any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply
with this subsection 10.1B shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with subsection 10.1C.
(ii) Acceptance by Agent; Recordation in Register. Upon
--------------------------------------------
its receipt of an Assignment Agreement executed by an assigning
Lender and an assignee representing that it is an Eligible
Assignee, together with the processing and recordation fee referred
to in subsection 10.1B(i) and any forms, certificates or other
evidence with respect to United States federal income tax
withholding matters that such assignee may be required to deliver
to Agent pursuant to subsection 2.7B(iii), Agent shall, if Agent
(and Borrower, if required) has consented to the assignment
evidenced thereby (to the extent such consent is required pursuant
to subsection 10.1B(i)), (a) accept such Assignment Agreement by
executing a counterpart thereof as provided therein (which
acceptance shall evidence any required consent of Agent to such
assignment), (b) record the information contained therein in the
Register, and (c) give prompt notice thereof
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to Borrower. Agent shall maintain a copy of each Assignment
Agreement delivered to and accepted by it as provided in this
subsection 10.1B(ii).
C. Participations. Any Lender may, without the consent of, or
notice to, Borrower or Agent, sell participations to one or more banks or other
entities in all or a portion of such Lender's rights and/or obligations under
this Agreement; provided that (i) such Lender's obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (iii) Borrower,
Agent and Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver directly affecting (i) the extension of the
scheduled final maturity date of any Loan allocated to such participation or
(ii) a reduction of the principal amount of or the rate of interest payable on
any Loan allocated to such participation. Subject to the further provisions of
this subsection 10.1C, Borrower agrees that each Participant shall be entitled
to the benefits of subsections 2.6D and 2.7 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to subsection 10.1B.
To the extent permitted by law, each Participant also shall be entitled to the
benefits of subsection 10.4 as though it were a Lender, provided such
Participant agrees to be subject to subsection 10.5 as though it were a Lender.
A Participant shall not be entitled to receive any greater payment under
subsections 2.6D and 2.7 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant unless the
sale of the participation to such Participant is made with Borrower's prior
written consent. A Participant that would be a Non-US Lender if it were a
Lender shall not be entitled to the benefits of subsection 2.7 unless Borrower
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of Borrower, to comply with subsection 2.7B(iii) as
though it were a Lender.
D. Pledges and Assignments. Any Lender may at any time pledge or
assign a security interest in all or any portion of its Loans, and the other
Obligations owed to such Lender, to secure obligations of such Lender, including
without limitation any pledge or assignment to secure obligations to any Federal
Reserve Bank; provided that (i) no Lender shall be relieved of any of its
obligations hereunder as a result of any such assignment or pledge and (ii) in
no event shall any assignee or pledgee be considered to be a "Lender" or be
entitled to require the assigning Lender to take or omit to take any action
hereunder.
E. Information. Each Lender may furnish any information
concerning Borrower and its Subsidiaries in the possession of that Lender from
time to time to assignees and participants (including prospective assignees and
participants), subject to subsection 10.19.
F. Agreements of Lenders. Each Lender listed on the signature
pages hereof hereby agrees (i) that it is an Eligible Assignee described in
clause (A) of the definition thereof; (ii) that it has experience and expertise
in the making of loans such as the Loans; and (iii) that it will make its Loans
for its own account in the ordinary course of its business and without a view to
distribution of such Loans within the meaning of the Securities Act or the
146
Exchange Act or other federal securities laws (it being understood that, subject
to the provisions of this subsection 10.1, the disposition of such Loans or any
interests therein shall at all times remain within its exclusive control). Each
Lender that becomes a party hereto pursuant to an Assignment Agreement shall be
deemed to agree that the agreements of such Lender contained in Section 2(c) of
such Assignment Agreement are incorporated herein by this reference.
G. Cooperation in Syndication Efforts. Borrower shall, and shall
cause its Subsidiaries to, cooperate with Agent in its efforts to syndicate the
credit facilities described herein and to effect the assignment of portions of
Lenders' rights and obligations under this Agreement to Eligible Assignees.
Without limiting the generality of the foregoing, Borrower shall, and shall
cause its Subsidiaries to, participate in meetings with Lenders and prospective
lenders, assist Agent in the preparation of a confidential memorandum concerning
the credit facilities described in this Agreement to be used in connection with
Agent's syndication efforts and to use commercially reasonable efforts to cause
its professional advisors to provide all information concerning Borrower and its
Subsidiaries as may be reasonably requested by Agent.
10.2 Expenses.
--------
Whether or not the transactions contemplated hereby shall be
consummated, Borrower agrees to pay promptly (i) all the actual and reasonable
costs and expenses incurred by or on behalf of Agent of negotiation, preparation
and execution of the Loan Documents and any consents, amendments, waivers or
other modifications thereto; (ii) all the costs of furnishing all opinions by
counsel for Borrower (including any opinions reasonably requested by Agent or
Lenders as to any legal matters arising hereunder) and of Borrower's performance
of and compliance with all agreements and conditions on its part to be performed
or complied with under this Agreement and the other Loan Documents including
with respect to confirming compliance with environmental, insurance and solvency
requirements; (iii) the reasonable fees, expenses and disbursements of counsel
to Agent (including allocated costs of internal counsel) in connection with the
negotiation, preparation, execution and administration of the Loan Documents and
any consents, amendments, waivers or other modifications thereto and any other
documents or matters requested by Borrower; (iv) all the actual costs and
reasonable expenses of creating and perfecting Liens in favor of Agent on behalf
of Lenders pursuant to any Loan Document, including filing, recording and
registration fees, expenses and taxes, stamp or documentary taxes, search fees,
costs of examining Collateral, opening bank accounts and lockboxes, depositing
checks, receiving and transferring funds (including charges for checks for which
there are insufficient funds), costs of title insurance premiums, real estate
survey costs, and fees and taxes in connection with the filing of financing
statements, costs of preparing and recording or registering Loan Documents,
other fees, expenses and disbursements of counsel to Agent and of other counsel
providing any opinions that Agent or Requisite Lenders may reasonably request in
respect of the Loan Documents or the Liens created pursuant thereto, and fees
and expenses of legal counsel to Agent; (v) all the actual costs and reasonable
expenses (including the reasonable fees, expenses and disbursements of any
auditors, accountants or appraisers and any environmental or other consultants,
advisors and agents employed or retained by Agent or its counsel) of obtaining
and reviewing any appraisals provided for under this Agreement and any
environmental audits or reports provided for under this Agreement; (vi) the
costs incurred by Agent in connection with the custody or preservation of any of
the Collateral; (vii) all other actual and reasonable costs and expenses
incurred by Agent in connection with the
147
syndication of the Commitments and the negotiation, preparation and execution of
the Loan Documents and any consents, amendments, waivers or other modifications
thereto and the transactions contemplated thereby; and (viii) all costs and
expenses, including reasonable attorneys' fees (including allocated costs of
internal counsel) and costs of settlement, incurred by Agent and Lenders in
enforcing any Obligations of or in collecting any payments due from any Loan
Party hereunder or under the other Loan Documents (including in connection with
the sale of, collection from, or other realization upon any of the Collateral or
the enforcement of the Guaranties) or in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement in the
nature of a "work-out" or pursuant to any insolvency or bankruptcy proceedings.
10.3 Indemnity.
---------
In addition to the payment of expenses pursuant to subsection 10.2,
whether or not the transactions contemplated hereby shall be consummated,
Borrower agrees to defend (subject to Indemnitees' selection of counsel),
indemnify, pay and hold harmless Agent and Lenders, and the officers, directors,
employees, agents and affiliates of Agent and Lenders (collectively called the
"Indemnitees"), from and against any and all Indemnified Liabilities (as
hereinafter defined); provided that Borrower shall not have any obligation to
any Indemnitee hereunder with respect to any Indemnified Liabilities to the
extent such Indemnified Liabilities arise from the gross negligence or willful
misconduct of that Indemnitee as determined by a final judgment of a court of
competent jurisdiction.
As used herein, "Indemnified Liabilities" means, collectively, any
and all liabilities, obligations, losses, damages (including natural resource
damages), penalties, actions, judgments, suits, claims (including Environmental
Claims), costs (including the costs of any investigation, study, sampling,
testing, abatement, cleanup, removal, remediation or other response action
necessary to remove, remediate, clean up or xxxxx any Hazardous Materials
Activity), expenses and disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel for Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened by any Person, whether or not any such Indemnitee shall
be designated as a party or a potential party thereto, and any fees or expenses
incurred by Indemnitees in enforcing this indemnity), whether direct, indirect
or consequential and whether based on any federal, state or foreign laws,
statutes, rules or regulations (including securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common law or
equitable cause or on contract or otherwise, that may be imposed on, incurred
by, or asserted against any such Indemnitee, in any manner relating to or
arising out of (i) this Agreement or the other Loan Documents or any Related
Agreement or the transactions contemplated hereby or thereby (including Lenders'
agreement to make the Loans hereunder or the use or intended use of the proceeds
thereof or the issuance of Letters of Credit hereunder or the use or intended
use of any thereof, or any enforcement of any of the Loan Documents (including
any sale of, collection from, or other realization upon any of the Collateral or
the enforcement of the Guaranties)), or (ii) any Environmental Claim or any
Hazardous Materials Activity relating to or arising from, directly or
indirectly, any past or present activity, operation, land ownership, or practice
of Borrower or any of its Subsidiaries.
148
To the extent that the undertakings to defend, indemnify, pay and
hold harmless set forth in this subsection 10.3 may be unenforceable in whole or
in part because they are violative of any law or public policy, Borrower shall
contribute the maximum portion that its is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Indemnitees or any of them.
10.4 Set-Off; Security Interest in Deposit Accounts.
----------------------------------------------
In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, upon the occurrence and
during the continuance of any Event of Default and consultation with Agent each
Lender is hereby authorized by Borrower at any time or from time to time,
without notice to Borrower or to any other Person, any such notice being hereby
expressly waived (provided that Agent shall use its best efforts to notify
Borrower promptly following any such set-off, appropriation or application), to
set off and to appropriate and to apply any and all deposits (general or
special, including Indebtedness evidenced by certificates of deposit, whether
matured or unmatured, but not including trust accounts) and any other
Indebtedness at any time held or owing by that Lender or any Affiliate of such
Lender to or for the credit or the account of Borrower and each other Loan Party
against and on account of the obligations and liabilities of Borrower or any
other Loan Party to that Lender (or any Affiliate of such Lender) or to any
other Lender (or any Affiliate of any other Lender) under this Agreement, the
Letters of Credit and participations therein and the other Loan Documents,
including all claims of any nature or description arising out of or connected
with this Agreement, the Letters of Credit and participations therein or any
other Loan Document, irrespective of whether or not (i) that Lender shall have
made any demand hereunder or (ii) the principal of or the interest on the Loans
or any amounts in respect of the Letters of Credit or any other amounts due
hereunder shall have become due and payable pursuant to Section 8 and although
said obligations and liabilities, or any of them, may be contingent or
unmatured. Borrower hereby further grants to Agent and each Lender a security
interest in all deposits and accounts maintained with Agent or such Lender as
security for the Obligations.
10.5 Ratable Sharing.
---------------
Lenders hereby agree among themselves that if any of them shall,
whether by voluntary payment (other than a voluntary prepayment of Loans made
and applied in accordance with the terms of this Agreement), by realization upon
security, through the exercise of any right of set-off or banker's lien, by
counterclaim or cross action or by the enforcement of any right under the Loan
Documents or otherwise, or as adequate protection of a deposit treated as cash
collateral under the Bankruptcy Code or under any other Insolvency Laws, receive
payment or reduction of a proportion of the aggregate amount of principal,
interest, amounts payable in respect of Letters of Credit, fees and other
amounts then due and owing to that Lender hereunder or under the other Loan
Documents (collectively, the "Aggregate Amounts Due" to such Lender) that is
greater than the proportion received by any other Lender in respect of the
Aggregate Amounts Due to such other Lender, then the Lender receiving such
proportionately greater payment shall (i) notify Agent and each other Lender of
the receipt of such payment and (ii) apply a portion of such payment to purchase
assignments (which it shall be deemed to have purchased from each seller of an
assignment simultaneously upon the receipt by such seller of its portion of such
payment) of the Aggregate Amounts Due to the other Lenders so that all such
149
recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion
to the Aggregate Amounts Due to them; provided that if all or part of such
proportionately greater payment received by such purchasing Lender is thereafter
recovered from such Lender upon the bankruptcy or reorganization of Borrower or
otherwise, those purchases shall be rescinded and the purchase prices paid for
such assignments shall be returned to such purchasing Lender ratably to the
extent of such recovery, but without interest. Borrower expressly consents to
the foregoing arrangement and agrees that any purchaser of an assignment so
purchased may exercise any and all rights of a Lender as to such assignment as
fully as if that Lender had complied with the provisions of subsection 10.1B
with respect to such assignment. In order to further evidence such assignment
(and without prejudice to the effectiveness of the assignment provisions set
forth above), each purchasing Lender and each selling Lender agree to enter into
an Assignment Agreement at the request of a selling Lender or a purchasing
Lender, as the case may be, in form and substance reasonably satisfactory to
each such Lender.
10.6 Amendments and Waivers.
----------------------
No amendment, modification, termination or waiver of any provision
of this Agreement or of the Notes, and no consent to any departure by Borrower
therefrom, shall in any event be effective without the written concurrence of
Requisite Lenders; provided that no such amendment, modification, termination,
waiver or consent shall, without the consent of (a) each Lender with Obligations
directly affected (whose consent shall be required for any such amendment,
modification, termination or waiver in addition to that of Requisite Lenders)
(1) reduce the principal amount of any Loan, (2) increase the maximum aggregate
amount of Letters of Credit, (3) postpone the scheduled final maturity date (but
not the date of any scheduled installment of principal) of any Loan, (4)
postpone the date on which any interest or any fees are payable, (5) decrease
the interest rate borne by any Loan (other than any waiver of any increase in
the interest rate applicable to any of the Loans pursuant to subsection 2.2E) or
the amount of any fees payable hereunder, (6) reduce the amount or postpone the
due date of any amount payable in respect of any Letter of Credit, (7) extend
the expiration date of any Letter of Credit beyond the Revolving Loan Commitment
Termination Date or (8) change in any manner the obligations of Lenders relating
to the purchase of participations in Letters of Credit; (b) each Lender, (1)
change in any manner the definition of "Requisite Lenders" (except for any
changes resulting solely from an increase in Commitments approved by Requisite
Lenders), (2) change in any manner any provision of this Agreement that, by its
terms, expressly requires the approval or concurrence of all Lenders, (3)
increase the maximum duration of Interest Periods permitted hereunder, (4)
release any Lien granted in favor of Agent with respect to all or substantially
all of the Collateral or release any material Guarantor from its obligations
under the Guaranty, in each case other than in accordance with the terms of the
Loan Documents, (5) increase the amount of any of the Commitments; (6) change in
any manner or waive the provisions contained in subsection 8.1 or this
subsection 10.6; (7) change in any manner the provisions contained in the second
paragraph of subsection 2.1C(ii); (8) increase the advance rate with respect to
the Revolving Loans (except for the restoration by Agent of an advance rate in
whole or in part to its original level after the prior reduction thereof by
Agent); (9) increase the advance rate with respect to any category of Collateral
(e.g., 85% of Eligible Accounts Receivables, 35% of Eligible Unbilled Accounts
Receivables) except for the restoration by Agent of any such advance rate in
whole or in part to its original level after the prior reduction thereof; or
(10) change the definition of "Australian Joy Subsidiary Borrowing Base,"
"Australian P&H Subsidiary Borrowing Base," "Consolidated Borrowing Base,"
"Domestic Borrowing Base" or "UK Subsidiary Borrowing Base" with respect to the
maximum amounts (or reductions thereof) of Eligible Intellectual Property,
Eligible Real Estate and Eligible Machinery and Equipment that may be included
in such Borrowing Bases; or (c) Lenders having or holding more than 75% of the
sum of aggregate Tranche B Term Loan Exposure of all Lenders plus the aggregate
Revolving Loan Exposure of all Lenders (1) change in any manner or waive the
provisions contained in subsection 7.7(iv), or (2) release a material portion of
the Collateral. In addition, (i) any amendment, modification, termination or
waiver of any of the provisions contained in Section 4 shall be effective only
if evidenced by a writing signed by or on behalf of Agent and Requisite Lenders,
(ii) no amendment, modification, termination or waiver of any provision of any
Note shall be effective without the written concurrence of the Lender which is
the holder of that Note, (iii) no
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amendment, modification, termination or waiver of any provision of Section 3
shall be effective without the written concurrence of Agent and, with respect to
the purchase of participations in Letters of Credit, without the written
concurrence of each Issuing Lender that has issued an outstanding Letter of
Credit or has not been reimbursed for a payment under a Letter of Credit, and
(iv) no amendment, modification, termination or waiver of any provision of
Section 9 or of any other provision of this Agreement which, by its terms,
expressly requires the approval or concurrence of Agent shall be effective
without the written concurrence of Agent. Agent may, but shall have no
obligation to, with the concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of that Lender. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on Borrower in any case
shall entitle Borrower to any other or further notice or demand in similar or
other circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this subsection 10.6 shall be binding upon each
Lender at the time outstanding, each future Lender and, if signed by Borrower,
on Borrower.
10.7 Independence of Covenants.
-------------------------
All covenants hereunder shall be given independent effect so that
if a particular action or condition is not permitted by any of such covenants,
the fact that it would be permitted by an exception to, or would otherwise be
within the limitations of, another covenant shall not avoid the occurrence of an
Event of Default or Potential Event of Default if such action is taken or
condition exists.
10.8 Notices; Effectiveness of Signatures.
------------------------------------
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, or sent by telefacsimile or United States mail or
courier service and shall be deemed to have been given when delivered in person
or by courier service, upon receipt of telefacsimile in complete and legible
form, or three Business Days after depositing it in the United States mail with
postage prepaid and properly addressed; provided that notices to Agent shall not
--------
be effective until received. For the purposes hereof, the address of each party
hereto shall be as set forth under such party's name on the signature pages
hereof or (i) as to Borrower and Agent, such other address as shall be
designated by such Person in a written notice delivered to the other parties
hereto and (ii) as to each other party, such other address as shall be
designated by such party in a written notice delivered to Agent. Electronic
mail may be used to distribute routine communications, such as financial
statements and other information; provided, however, that no signature with
-------- -------
respect to any notice, request, agreement, waiver, amendment or other document
or any notice that is intended to have binding effect may be sent by electronic
mail.
Loan Documents and notices under the Loan Documents may be
transmitted and/or signed by facsimile. The effectiveness of any such documents
and signatures shall, subject to applicable law, have the same force and effect
as an original copy with manual signatures and shall be binding on all Loan
Parties, Agents and Lenders. Agent may also require that any such documents and
signature be confirmed by a manually-signed copy thereof; provided, however,
that the failure to request or deliver any such manually-signed copy shall not
affect the effectiveness of any facsimile document or signature.
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10.9 Survival of Representations, Warranties and Agreements.
------------------------------------------------------
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
and the issuance of the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied by law to
the contrary, the agreements of Borrower set forth in subsections 2.6D, 2.7,
3.5A, 10.2, 10.3, 10.4, 10.17 and 10.18 and the agreements of Lenders set forth
in subsections 9.2C, 9.4, 10.5, 10.18 and 10.19 shall survive the payment of the
Loans, the cancellation or expiration of the Letters of Credit and the
reimbursement of any amounts drawn thereunder, and the termination of this
Agreement.
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative.
-----------------------------------------------------
No failure or delay on the part of an Agent or any Lender in the
exercise of any power, right or privilege hereunder or under any other Loan
Document shall impair such power, right or privilege or be construed to be a
waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
10.11 Marshalling; Payments Set Aside.
-------------------------------
Neither Agent nor any Lender shall be under any obligation to marshal
any assets in favor of Borrower or any other party or against or in payment of
any or all of the Obligations. To the extent that Borrower makes a payment or
payments to Agent or Lenders (or to Agent for the benefit of Lenders), or Agent
or Lenders enforce any security interests or exercise their rights of setoff,
and such payment or payments or the proceeds of such enforcement or setoff or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, any other state or federal law, common
law or any equitable cause, then, to the extent of such recovery, the obligation
or part thereof originally intended to be satisfied, and all Liens, rights and
remedies therefor or related thereto, shall be revived and continued in full
force and effect as if such payment or payments had not been made or such
enforcement or setoff had not occurred.
10.12 Severability.
------------
In case any provision in or obligation under this Agreement or the
Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
10.13 Obligations Several; Independent Nature of Lenders' Rights.
----------------------------------------------------------
The obligations of Lenders hereunder are several and no Lender shall
be responsible for the obligations or Commitments of any other Lender hereunder.
Nothing
152
contained herein or in any other Loan Document, and no action taken by Lenders
pursuant hereto or thereto, shall be deemed to constitute Lenders, or Lenders
and Borrower, as a partnership, an association, a joint venture or any other
kind of entity. The amounts payable at any time hereunder to each Lender shall
be a separate and independent debt, and each Lender shall be entitled to protect
and enforce its rights arising out of this Agreement and it shall not be
necessary for any other Lender to be joined as an additional party in any
proceeding for such purpose.
10.14 Headings.
--------
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
10.15 Applicable Law.
--------------
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK),
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD REQUIRE APPLICATION
OF ANOTHER LAW.
NOTWITHSTANDING THE FOREGOING, THE PARTIES AGREE THAT:
(A) THE LAW OF THE STATE IN WHICH EACH MORTGAGED PROPERTY IS SITUATED
(THE "SITUS STATE") GOVERNS PROCEDURES FOR ENFORCING, IN THE SITUS STATE,
PROVISIONAL REMEDIES DIRECTLY RELATED TO SUCH REAL PROPERTY, INCLUDING, WITHOUT
LIMITATION, APPOINTMENT OF A RECEIVER.
(B) THE LAW OF THE SITUS STATE ALSO APPLIES TO THE EXTENT, BUT ONLY
TO THE EXTENT, NECESSARY TO CREATE, TO PERFECT, AND TO FORECLOSE THE SECURITY
INTERESTS AND LIENS CREATED BY THE LOAN DOCUMENTS, BUT DOES NOT APPLY TO ANY
OBLIGATION SECURED THEREBY. THOSE OBLIGATIONS ARE GOVERNED BY NEW YORK LAW. IN
FURTHERANCE OF THE FOREGOING, THE PARTIES STIPULATE AND AGREE THAT AGENT AND
LENDERS MAY ENFORCE IN ACCORDANCE WITH NEW YORK LAW ANY OR ALL OF ITS RIGHTS TO
XXX ANY LOAN PARTY TO COLLECT ANY INDEBTEDNESS, AND TO OBTAIN A DEFICIENCY
JUDGMENT AGAINST BORROWER IN THE SITUS STATE, NEW YORK, OR ELSEWHERE, BEFORE OR
AFTER FORECLOSURE, AND IF AGENT OR ANY LENDER OBTAINS A DEFICIENCY JUDGMENT
OUTSIDE THE SITUS STATE, IT MAY ENFORCE THAT JUDGMENT IN THE SITUS STATE, AS
WELL AS IN OTHER STATES.
153
10.16 Construction of Agreement; Nature of Relationship.
-------------------------------------------------
Each of the parties hereto acknowledges that (i) it has been
represented by counsel in the negotiation and documentation of the terms of this
Agreement, (ii) it has had full and fair opportunity to review and revise the
terms of this Agreement, (iii) this Agreement has been drafted jointly by all of
the parties hereto, and (iv) neither Agent nor any Lender or other Agent has any
fiduciary relationship with or duty to Borrower arising out of or in connection
with this Agreement or any of the other Loan Documents, and the relationship
between Agent, the other Agents and Lenders, on one hand, and Borrower, on the
other hand, in connection herewith or therewith is solely that of debtor and
creditor. Accordingly, each of the parties hereto acknowledges and agrees that
the terms of this Agreement shall not be construed against or in favor of
another party.
10.17 Consent to Jurisdiction and Service of Process.
----------------------------------------------
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST BORROWER ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN XXX XXXXX, XXXXXX XXX XXXX XX XXX XXXX. BY EXECUTING AND
DELIVERING THIS AGREEMENT, BORROWER, FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN
ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO COMPANY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SUBSECTION
10.8;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST COMPANY IN
THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.17 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR
OTHERWISE.
154
10.18 Waiver of Jury Trial.
--------------------
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including contract claims, tort claims, breach of duty claims and all other
common law and statutory claims. Each party hereto acknowledges that this
waiver is a material inducement to enter into a business relationship, that each
has already relied on this waiver in entering into this Agreement, and that each
will continue to rely on this waiver in their related future dealings. Each
party hereto further warrants and represents that it has reviewed this waiver
with its legal counsel and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION
10.18 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court.
10.19 Confidentiality.
---------------
Each Lender shall hold all non-public information obtained pursuant
to the requirements of this Agreement in accordance with such Lender's customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices, it being understood and agreed
by Borrower that in any event a Lender may make disclosures (a) to its and its
Affiliates' directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
information and instructed to keep such information confidential), (b) subject
to the applicable limitations set forth herein, to the extent requested by any
Government Authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
to this Agreement, (e) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or the enforcement
of rights hereunder, (f) subject to an agreement containing provisions
substantially the same as those of this subsection 10.19, to (i) any Eligible
Assignee of or participant in, or any prospective Eligible Assignee of or
Participant in, any of its rights or obligations under this Agreement or (ii)
any direct or indirect contractual counterparty or prospective counterparty (or
such contractual counterparty's or prospective counterparty's professional
advisor) to any credit derivative transaction relating to obligations of
Borrower, (g) with the consent of Borrower, (h) to the extent such information
(i) becomes publicly available other than as a result of a breach of this
subsection 10.19 or
155
(ii) becomes available to Agent or any Lender on a nonconfidential basis from a
source other than Borrower or (i) to the National Association of Insurance
Commissioners or any other similar organization or any nationally recognized
rating agency that requires access to information about a Lender's or its
Affiliates' investment portfolio in connection with ratings issued with respect
to such Lender or its Affiliates and that no written or oral communications from
counsel to Agent and no information that is or is designated as privileged or as
attorney work product may be disclosed to any Person unless such Person is a
Lender or a participant hereunder; provided that, unless specifically prohibited
by applicable law or court order, each Lender shall notify Borrower of any
request by any Government Authority or representative thereof (other than any
such request in connection with any examination of the financial condition of
such Lender by such Government Authority) for disclosure of any such non-public
information prior to disclosure of such information and shall use its best
efforts to afford Borrower the opportunity to object to such disclosure; and
provided, further that in no event shall any Lender be obligated or required to
return any materials furnished by Borrower or any of its Subsidiaries.
10.20 Counterparts; Effectiveness.
---------------------------
This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto.
10.21 Judgment Currency.
-----------------
(a) If, for the purposes of obtaining judgment in any court, it is
necessary to convert a sum due hereunder in Dollars into another currency, the
parties hereto agree, to the fullest extent permitted by law, that the rate of
exchange used shall be that at which in accordance with normal banking
procedures Agent or a Lender could purchase the Dollars with such other currency
in New York, New York on the Business Day immediately preceding the day on which
any such judgment, or any relevant part thereof, is given.
(b) The obligations of Borrower in respect of any sum due from it to
Agent or any Lender hereunder shall, notwithstanding any judgment in a currency
other than Dollars, be discharged only to the extent that on the Business Day
following receipt by Agent or such Lender of any sum adjudged to be so due in
such other currency Agent or such Lender may in accordance with normal banking
procedures purchase Dollars with such other currency; if the Dollars so
purchased are less than the sum originally due Agent or such Lender in Dollars,
Borrower agrees, as a separate obligation and notwithstanding any such judgment,
to indemnify Agent or such Lender against such loss, and if the Dollars so
purchased exceed the sum originally due to Agent or such Lender in Dollars,
Lender shall remit such excess to Borrower.
[Remainder of page intentionally left blank]
156
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
Borrower:
HARNISCHFEGER INDUSTRIES, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxx
--------------------------------
Title: Secretary
-----------------------------
Notice Address:
S-1
LENDERS:
BANKERS TRUST COMPANY,
as a Lender and as Agent
By: /s/ Xxxx X. Xxxxxx
------------------------------
Title: Vice President
---------------------------
Notice Address:
Bankers Trust Company
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
0 Xxxxxxx Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxxx Xxxxxxx
Telecopy: 000-000-0000
S-2
[LENDER],
as a Lender
By:_________________________________
Title:______________________________
Notice Address:
S-3
DEUTSCHE BANK, AG, New York Branch,
as an Issuing Lender
By:__________________________________
Title:_______________________________
Notice Address:
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: _____________
Telecopy No.:___________
S-4
